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What changed in Yalla Group Ltd's 20-F — 2022 vs 2023

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Paragraph-level year-over-year comparison of Yalla Group Ltd's 2022 and 2023 20-F annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+412 added−369 removedSource: 20-F (2024-04-23) vs 20-F (2023-04-20)

Top changes in Yalla Group Ltd's 2023 20-F

412 paragraphs added · 369 removed · 310 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

103 edited+30 added−16 removed386 unchanged
Biggest changeBased on the past and projected composition of our income and assets, and the valuation of our assets, including goodwill, we believe we were a passive foreign investment company (a “PFIC”) for our most recent taxable year, and there is a significant risk that we may be classified as a PFIC in the current taxable year and in future taxable years. 36 In general, we will be a PFIC for any taxable year in which: • at least 75% of our gross income is passive income, or • at least 50% of the value (determined based on a quarterly average) of our assets is attributable to assets that produce or are held for the production of passive income, which include cash, such as cash raised in our initial public offering.
Biggest changeBased on the past and projected composition of our income and assets, and the valuation of our assets, including goodwill, we believe we were a passive foreign investment company, or PFIC, for our most recent taxable year, and there is a significant likelihood that we will be classified as a PFIC in the current taxable year and in future taxable years.
A number of factors could negatively affect user retention, growth and engagement, including if: • we suffer from negative publicity, fail to maintain our brand or if our reputation is damaged because we are unable to combat inappropriate, illegal or abusive use of our platform, or because we fail to comply with regulatory requirements on user privacy and data collection, or due to other reasons; • technical or other problems prevent us from delivering our services in a rapid and reliable manner or otherwise adversely affect the user experience; • we fail to innovate the features, virtual gifts and functions of our mobile applications that keep our users interested and eager to return to our platform on a regular basis; • we fail to adapt to the local cultures and regulatory environment of existing or new markets that we enter into; • we fail to address user concerns related to privacy and communication, safety, security or other factors; 5 • we fail to continuously develop and offer attractive products and services to users; • users change their social networking habits or spending patterns; or • there are adverse changes in our services that are mandated by, or that we elect to make to address concerns about, legislation, regulations or government policies.
A number of factors could negatively affect user retention, growth and engagement, including if: • we suffer from negative publicity, fail to maintain our brand or if our reputation is damaged because we are unable to combat inappropriate, illegal or abusive use of our platform, or because we fail to comply with regulatory requirements on user privacy and data collection, or due to other reasons; 5 • technical or other problems prevent us from delivering our services in a rapid and reliable manner or otherwise adversely affect the user experience; • we fail to innovate the features, virtual gifts and functions of our mobile applications that keep our users interested and eager to return to our platform on a regular basis; • we fail to adapt to the local cultures and regulatory environment of existing or new markets that we enter into; • we fail to address user concerns related to privacy and communication, safety, security or other factors; • we fail to continuously develop and offer attractive products and services to users; • users change their social networking habits or spending patterns; or • there are adverse changes in our services that are mandated by, or that we elect to make to address concerns about, legislation, regulations or government policies.
Our continued international operations and global expansion may result in increased costs and expose us to a number of challenges and risks, including: • challenges in developing successful products and implementing effective marketing strategies that respectively target users from various countries and with a diverse range of preferences and demands; • difficulties in managing and overseeing global operations and in affording increased costs associated with doing business in multiple international locations; • challenges in tailoring our interfaces to our users’ diverse cultural backgrounds; • competition from global and local online social networking and gaming industry players; • risks related to the regulatory environment in various jurisdictions in which our mobile applications are available, uncertainties and unexpected changes in applicable laws, regulations and enforcement; 7 • burdens of complying with local laws and regulations, including in respect of Internet content control, social media content, virtual currencies and other virtual items, cybersecurity and data privacy, anti-corruption, payment and anti-money laundering, minors protection, licensing, approval or filing requirements, intellectual property protection, taxation, exchange controls, and economic sanctions; • political, social or economic instability in the relevant countries; • fluctuations in currency exchange rates; and • difficulties in integrating and managing potential acquisitions or investments.
Our continued international operations and global expansion may result in increased costs and expose us to a number of challenges and risks, including: 7 • challenges in developing successful products and implementing effective marketing strategies that respectively target users from various countries and with a diverse range of preferences and demands; • difficulties in managing and overseeing global operations and in affording increased costs associated with doing business in multiple international locations; • challenges in tailoring our interfaces to our users’ diverse cultural backgrounds; • competition from global and local online social networking and gaming industry players; • risks related to the regulatory environment in various jurisdictions in which our mobile applications are available, uncertainties and unexpected changes in applicable laws, regulations and enforcement; • burdens of complying with local laws and regulations, including in respect of Internet content control, social media content, virtual currencies and other virtual items, cybersecurity and data privacy, anti-corruption, payment and anti-money laundering, minors protection, licensing, approval or filing requirements, intellectual property protection, taxation, exchange controls, and economic sanctions; • political, social or economic instability in the relevant countries; • fluctuations in currency exchange rates; and • difficulties in integrating and managing potential acquisitions or investments.
In December 2021, the PCAOB made its determinations, or the 2021 determinations, pursuant to the HFCA Act that it was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China or Hong Kong including our auditor, KPMG Huazhen LLP.
In December 2021, the PCAOB made its determinations, or the 2021 determinations, pursuant to the HFCA Act that it was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China or Hong Kong including our auditor, KPMG Huazhen LLP.
You should also be aware that investments in emerging markets, such as MENA, are subject to greater risks than those in more developed markets, including risks such as: • political, social and economic instability; • exposure to local economic and social conditions, including cultural and communication challenges; • exposure to local political conditions, including political disputes, requirements to expend a portion of funds locally, and government-imposed industrial cooperation requirements, as well as increased risks of fraud and political corruption; • exposure to potentially undeveloped legal systems which make it difficult to enforce contractual rights and to potentially adverse changes in laws and regulatory practices, including licensing, approvals, grants, adjudications, and concessions, among others; • war, terrorism, rebellion, coup, revolution or similar events; • drought, famine, epidemics, pandemics and other complications due to natural or manmade disasters; • governments’ actions or interventions, including tariffs, protectionism, subsidies, various forms of exchange controls, expropriation of assets and cancellation of contractual rights; • boycotts and embargoes that may be imposed by the international community on countries in which we offer our mobile applications; • ambiguities, uncertainties and changes in taxation, licensing and other laws and regulations; • arbitrary or inconsistent government action, including capricious application of tax laws and selective tax audits; • controls on the repatriation of profits and/or dividends, including the imposition or increase of withholding and other taxes on remittances and other payments by foreign subsidiaries; • difficulties and delays in obtaining new permits, licenses and consents for business operations or renewing existing ones; • difficulties or an inability to obtain legal remedies in a timely manner; • compliance with a variety of US and other foreign laws, including (i) compliance (historical and future) with the requirements of applicable anti-bribery laws, including the UK Bribery Act 2010 and the US Foreign Corrupt Practices Act of 1977, and (ii) compliance (historical and future) with sanctions and export control provisions (including the US Export Administration Regulations) in several jurisdictions, including the European Union, the United Kingdom and the United States; and • potential lack of reliability as to title to real property in certain jurisdictions.
You should also be aware that investments in emerging markets, such as MENA, are subject to greater risks than those in more developed markets, including risks such as: • political, social and economic instability; • exposure to local economic and social conditions, including cultural and communication challenges; • exposure to local political conditions, including political disputes, requirements to expend a portion of funds locally, and government-imposed industrial cooperation requirements, as well as increased risks of fraud and political corruption; • exposure to potentially undeveloped legal systems which make it difficult to enforce contractual rights and to potentially adverse changes in laws and regulatory practices, including licensing, approvals, grants, adjudications, and concessions, among others; • war, terrorism, rebellion, coup, revolution or similar events; • drought, famine, epidemics, pandemics and other complications due to natural or manmade disasters; • governments’ actions or interventions, including tariffs, protectionism, subsidies, various forms of exchange controls, expropriation of assets and cancellation of contractual rights; • boycotts and embargoes that may be imposed by the international community on countries in which we offer our mobile applications; • ambiguities, uncertainties and changes in taxation, licensing and other laws and regulations; • arbitrary or inconsistent government action, including capricious application of tax laws and selective tax audits; 22 • controls on the repatriation of profits and/or dividends, including the imposition or increase of withholding and other taxes on remittances and other payments by foreign subsidiaries; • difficulties and delays in obtaining new permits, licenses and consents for business operations or renewing existing ones; • difficulties or an inability to obtain legal remedies in a timely manner; • compliance with a variety of US and other foreign laws, including (i) compliance (historical and future) with the requirements of applicable anti-bribery laws, including the UK Bribery Act 2010 and the US Foreign Corrupt Practices Act of 1977, and (ii) compliance (historical and future) with sanctions and export control provisions (including the US Export Administration Regulations) in several jurisdictions, including the European Union, the United Kingdom and the United States; and • potential lack of reliability as to title to real property in certain jurisdictions.
Investors should also note that our business could be adversely affected by political, economic or related developments both within and outside MENA because of inter-relationships within the global financial markets. Significant political, social and economic instability in one or more of our markets could have a material adverse effect on our business, financial condition and results of operations.
Investors should also note that our business could be adversely affected by political, economic or related developments both within and outside MENA because of inter-relationships within the global financial markets. 11 Significant political, social and economic instability in one or more of our markets could have a material adverse effect on our business, financial condition and results of operations.
If we fail to compete effectively, we may lose users, which could in turn materially and adversely affect our business, financial condition and results of operations; • our limited operating history with a relatively new business model in a relatively new market makes it difficult to evaluate our business and growth prospects; • our community culture is vital to our success.
If we fail to compete effectively, we may lose users, which could in turn materially and adversely affect our business, financial condition and results of operations; 4 • our limited operating history with a relatively new business model in a relatively new market makes it difficult to evaluate our business and growth prospects; • our community culture is vital to our success.
Any of the foregoing events may give rise to server interruptions, breakdowns, system failures, technology platform failures or Internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect our ability to provide services on our platform. 10 Our business is sensitive to global political and economic conditions.
Any of the foregoing events may give rise to server interruptions, breakdowns, system failures, technology platform failures or Internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect our ability to provide services on our platform. Our business is sensitive to global political and economic conditions.
If additional share options or other equity incentives are granted to our employees, directors or consultants in the future, we will incur additional share-based compensation expense and our results of operations will be further adversely affected. 11 Our corporate actions are substantially controlled by our Chairman and Chief Executive Officer, Mr.
If additional share options or other equity incentives are granted to our employees, directors or consultants in the future, we will incur additional share-based compensation expense and our results of operations will be further adversely affected. Our corporate actions are substantially controlled by our Chairman and Chief Executive Officer, Mr.
Any legal proceedings or measures we take in response to such disputes may be expensive, time-consuming and disruptive to our operations and divert our management’s attention. Our limited operating history with a relatively new business model in a relatively new market makes it difficult to evaluate our business and growth prospects.
Any legal proceedings or measures we take in response to such disputes may be expensive, time-consuming and disruptive to our operations and divert our management’s attention. 8 Our limited operating history with a relatively new business model in a relatively new market makes it difficult to evaluate our business and growth prospects.
As a result of the foregoing, the value of your investment could be materially reduced. User growth and engagement depend upon effective interoperation with mobile operating systems, networks, devices and standards that we do not control. We make our mobile applications available across a variety of mobile operating systems and devices.
As a result of the foregoing, the value of your investment could be materially reduced. 12 User growth and engagement depend upon effective interoperation with mobile operating systems, networks, devices and standards that we do not control. We make our mobile applications available across a variety of mobile operating systems and devices.
As a result, our reputation, business, and results of operations could be materially and adversely affected. 13 The security of operations of, and fees charged by, third-party payment platforms may have a material adverse effect on our business and results of operations. Currently, we process purchases of our virtual currencies through third-party payment platforms.
As a result, our reputation, business, and results of operations could be materially and adversely affected. The security of operations of, and fees charged by, third-party payment platforms may have a material adverse effect on our business and results of operations. Currently, we process purchases of our virtual currencies through third-party payment platforms.
Our ability to provide a superior user experience on our platform depends on the continuous and reliable operation of our IT systems. We may not be able to procure sufficient bandwidth in a timely manner or on acceptable terms or at all.
Our ability to provide a superior user experience on our platform depends on the continuous and reliable operation of our IT systems. 9 We may not be able to procure sufficient bandwidth in a timely manner or on acceptable terms or at all.
In addition, as we have servers mainly in data centers in Germany, the United States and Singapore, and we also store data locally in Oman, Qatar and UAE, we may incur significant costs in protecting them against, or remediating, security breaches and cyber-attacks.
In addition, as we have servers mainly in data centers in Germany and the United States, and we also store data locally in Oman, Qatar and UAE, we may incur significant costs in protecting them against, or remediating, security breaches and cyber-attacks.
As a result, we cannot assure you that we will be able to maintain our growth in such a competitive environment. 8 Furthermore, many elements of our business are evolving.
As a result, we cannot assure you that we will be able to maintain our growth in such a competitive environment. Furthermore, many elements of our business are evolving.
However, our operational and financial growth in 2020, 2021 and 2022 may not be indicative of our future performance, as our operating results represent a limited history and sample size and may be hard to repeat in the future. We also face fierce competition from new and existing competitors in our target markets, including MENA.
However, our operational and financial growth in 2021, 2022 and 2023 may not be indicative of our future performance, as our operating results represent a limited history and sample size and may be hard to repeat in the future. We also face fierce competition from new and existing competitors in our target markets, including MENA.
As of March 31, 2023, we had not obtained any VoIP or other telecommunications license and we have not received any notification from regulators or licensed telecommunications service providers alleging that we provide unlicensed VoIP or telecommunications services. We are nonetheless subject to uncertainties in laws and regulations, including those in MENA.
As of March 31, 2024, we had not obtained any VoIP or other telecommunications license and we have not received any notification from regulators or licensed telecommunications service providers alleging that we provide unlicensed VoIP or telecommunications services. We are nonetheless subject to uncertainties in laws and regulations, including those in MENA.
In addition, beginning at the same time, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. As of December 31, 2022, our management had concluded that our internal control over financial reporting is effective. See “Item 15.
In addition, beginning at the same time, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. As of December 31, 2023, our management had concluded that our internal control over financial reporting is effective. See “Item 15.
As of December 31, 2022, our mobile platform was available in over 160 countries, with Yalla in eight languages and Yalla Ludo in two languages. We believe the sustainable growth of our business depends on our ability to increase the penetration of our products in both our existing and new markets.
As of December 31, 2023, our mobile platform was available in over 160 countries, with Yalla in eight languages and Yalla Ludo in two languages. We believe the sustainable growth of our business depends on our ability to increase the penetration of our products in both our existing and new markets.
Controls and Procedures— Management’s Annual Report on Internal Control over Financial Reporting.” Our independent registered public accounting firm has issued a report, which has concluded that we maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022.
Controls and Procedures— Management’s Annual Report on Internal Control over Financial Reporting.” Our independent registered public accounting firm has issued a report, which has concluded that we maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023.
In his capacity as Ruler of Dubai, Vice President and Prime Minister of the UAE, His Highness Sheikh Mohammed bin Rashid Al Maktoum issued Decree No. 3 of 2021 on the listing of joint stock companies on securities exchanges in Dubai (the “Decree”).
In his capacity as Ruler of Dubai, Vice President and Prime Minister of the UAE, His Highness Sheikh Mohammed bin Rashid Al Maktoum issued Decree No. 3 of 2021 on the listing of joint stock companies on securities exchanges in Dubai, or the Decree.
Tao Yang, our Chairman and Chief Executive Officer, beneficially owns all the Class B ordinary shares issued and outstanding and exercises 84.5% of the aggregate voting power of our total issued and outstanding shares as of March 31, 2023. As a result, Mr.
Tao Yang, our Chairman and Chief Executive Officer, beneficially owns all the Class B ordinary shares issued and outstanding and exercises 84.5% of the aggregate voting power of our total issued and outstanding shares as of March 31, 2024. As a result, Mr.
Under the GDPR, data protection supervisory authorities are also given various enforcement powers, including that they can levy fines of up to Euro 20 million or up to 4% of an organization’s total worldwide annual turnover for the preceding financial year, whichever is higher, for non-compliance, which significantly increases our potential financial exposure for non-compliance.
Under the GDPR, data protection supervisory authorities are also given various enforcement powers, including that they can levy fines of up to EUR20 million or up to 4% of an organization’s total worldwide annual turnover for the preceding financial year, whichever is higher, for non-compliance, which significantly increases our potential financial exposure for non-compliance.
As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer. There is a significant risk that we may be classified as a passive foreign investment company, or PFIC, which could result in adverse United States tax consequences to United States investors.
As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer. There is a significant likelihood that we will be classified as a passive foreign investment company, or PFIC, which could result in adverse United States tax consequences to United States investors.
Certain of our directors and executive officers reside within China, and a portion of our assets and the assets of those persons are located within China. It may not be possible for investors to effect service of process upon us or those persons inside China or to enforce against us or them in China any judgments obtained from non-PRC courts.
Certain of our directors and executive officers reside within China, and a portion of our assets and the assets of those persons are located within China. It may be difficult for investors to effect service of process upon us or those persons inside China or to enforce against us or them in China any judgments obtained from non-PRC courts.
MENA is our key market, and we have data centers with servers that collect and process our user data mainly in Germany, the United States and Singapore. In addition, we also store data locally in Oman, Qatar and UAE. As of December 31, 2022, our platform was available in over 160 countries.
MENA is our key market, and we have data centers with servers that collect and process our user data mainly in Germany and the United States. In addition, we also store data locally in Oman, Qatar and UAE. As of December 31, 2023, our platform was available in over 160 countries.
The PRC Civil Code, the PRC Cyber Security Law, the Personal Information Protection Law, the Provisions on the Cyber Protection of Children’s Personal Information, and the PRC Data Security Law set forth the regime to protect individual privacy and personal data security in general by requiring internet service providers to collect data in accordance with the laws and in proper manner, and obtain consents from internet users prior to the collection, use or disclosure of internet users’ personal data, and the PRC Cyber Security Law sets high requirements for the operational security of facilities deemed to be part of China’s “critical information infrastructure.” Furthermore, the Cybersecurity Review Measures and the Measures for the Security Assessment of Data Cross-border Transfer require that a “network platform operator” that possesses personal information of more than one million users apply for a cybersecurity review when seeking overseas listing, and that a data processor apply for security assessment for its cross-border data transfer based on the importance and amount of the data transferred.
The PRC Civil Code, the PRC Cyber Security Law, the Personal Information Protection Law, the Provisions on the Cyber Protection of Children’s Personal Information, the Regulation on the Protection of Minors in Cyberspace and the PRC Data Security Law set forth the regime to protect individual privacy and personal data security in general by requiring internet service providers to collect data in accordance with the laws and in proper manner, and obtain consents from internet users prior to the collection, use or disclosure of internet users’ personal data, and the PRC Cyber Security Law sets high requirements for the operational 15 security of facilities deemed to be part of China’s “critical information infrastructure.” Furthermore, the Cybersecurity Review Measures, the Measures for the Security Assessment of Data Cross-border Transfer and the Provisions on Promoting and Regulating Cross-border Data Flow require that a “network platform operator” that possesses personal information of more than one million users apply for a cybersecurity review when seeking overseas listing, and that a data processor apply for security assessment for its cross-border data transfer based on the importance and amount of the data transferred.
In addition, PRC government’s significant authority in regulating our operations and its oversight and control over offerings conducted overseas by, and foreign investment in, issuers with operations in China could significantly limit or completely hinder our ability to offer or continue to offer securities to investors.
In addition, PRC government’s significant authority in regulating our operations and its oversight and control over offerings conducted overseas by, and foreign investment in, issuers with operations in China could limit our ability to offer or continue to offer securities to investors.
The UAE’s economy as well as a number of other economies within MENA are highly dependent upon the oil and gas industry.
The economies of a number of our markets in MENA are highly dependent upon the oil and gas industry. The UAE’s economy as well as a number of other economies within MENA are highly dependent upon the oil and gas industry.
While we strive to comply with our data privacy guidelines as well as all applicable data protection laws and regulations or contract obligations, any failure or perceived failure to comply, including in relation to lawful basis of data processing and providing users with sufficient information with respect to our use of their personal data, may result in proceedings or actions against us, including fines and penalties on us, by government entities or proceedings or actions against us by our business partners or others (including enforcement orders requiring us to cease collecting or processing data in a certain way), and could damage our reputation and discourage current and future users from using our mobile applications.
The proliferation of such laws within jurisdictions and countries in which we operate may result in conflicting and contradictory requirements. 16 While we strive to comply with our data privacy guidelines as well as all applicable data protection laws and regulations or contract obligations, any failure or perceived failure to comply, including in relation to lawful basis of data processing and providing users with sufficient information with respect to our use of their personal data, may result in proceedings or actions against us, including fines and penalties on us, by government entities or proceedings or actions against us by our business partners or others (including enforcement orders requiring us to cease collecting or processing data in a certain way), and could damage our reputation and discourage current and future users from using our mobile applications.
The determination of whether we are a PFIC is made annually. If we are a PFIC for any taxable year during which you hold our ADSs or Class A ordinary shares, our PFIC status could result in adverse United States federal income tax consequences to you if you are a United States Holder, as defined under “Item 10. Additional Information—E.
If we are a PFIC for any taxable year during which you hold our ADSs or Class A ordinary shares, our PFIC status could result in adverse United States federal income tax consequences to you if you are a United States Holder, as defined under “Item 10. Additional Information—E.
If we fail to implement and maintain an effective system of internal controls over financial reporting, we may be unable to accurately report our results of operations, meet our reporting obligations or prevent fraud, and investor confidence and the market price of the ADSs may be materially and adversely affected.
In such event, the trading price of the ADSs would likely be materially and adversely affected. 20 If we fail to implement and maintain an effective system of internal controls over financial reporting, we may be unable to accurately report our results of operations, meet our reporting obligations or prevent fraud, and investor confidence and the market price of the ADSs may be materially and adversely affected.
As of December 31, 2022, 27,348,713 Class A ordinary shares were issuable upon the exercise of outstanding share options under the 2018 Plan. On August 31, 2020, we adopted the 2020 Plan. See “Item 6. Directors, Senior Management and Employees—B. Compensation—Share Incentive Plans” for a detailed discussion.
As of December 31, 2023, 23,460,740 Class A ordinary shares were issuable upon the exercise of outstanding share options under the 2018 Plan. On August 31, 2020, we adopted the 2020 Plan. See “Item 6. Directors, Senior Management and Employees—B. Compensation—Share Incentive Plans” for a detailed discussion.
As of December 31, 2022, 4,493,125 Class A ordinary shares were issuable upon the exercise of outstanding share options under the 2020 Plan. We are required to recognize compensation expense for an equity award over the period in which the recipient is required to provide service in exchange for the equity award.
As of December 31, 2023, 6,989,288 Class A ordinary shares were issuable upon the exercise of outstanding share options under the 2020 Plan. We are required to recognize compensation expense for an equity award over the period in which the recipient is required to provide service in exchange for the equity award.
The trading prices of the ADSs have fluctuated since we first listed our ADSs. Since our ADSs became listed on the NYSE on September 30, 2020, the trading prices of our ADSs ranged from US$3.00 to US$41.35 per ADS, and the last reported trading price on April 18, 2023 was US$3.93 per ADS.
The trading prices of the ADSs have fluctuated since we first listed our ADSs. Since our ADSs became listed on the NYSE on September 30, 2020, the trading prices of our ADSs ranged from US$3.00 to US$41.35 per ADS, and the last reported trading price on April 19, 2024 was US$4.52 per ADS.
For example, the UAE has recently introduced Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses (the “ CT Law ”), which will be applicable to financial years beginning on or after June 1, 2023.
For example, the UAE has introduced Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses, or the CT Law, which applies to financial years beginning on or after June 1, 2023.
For example, our board of directors has the authority, without further action by our shareholders, to issue preferred shares in one or more series and to fix their designations, powers, preferences, privileges, and relative participating, optional or other rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our Class A ordinary shares, in the form of ADSs or otherwise.
For example, our board of directors has the authority, without further action by our shareholders subject however to there being authorized but unissued undesignated shares in the third amended and restated memorandum of association, to issue preferred shares in one or more series and to fix their designations, powers, preferences, privileges, and relative participating, optional or other rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our Class A ordinary shares, in the form of ADSs or otherwise.
Our business and operating results may be harmed by service disruptions, or by our failure to timely and effectively scale up and adjust our existing technology and infrastructure. 4 Risks Relating to Doing Business in Certain Countries and Regions We are subject to risks and uncertainties relating to doing business in certain countries and regions in general, including, but are not limited to, the following: • investments in emerging markets are subject to greater risks than those in more developed markets; • the economies of a number of our markets in MENA are highly dependent upon the oil and gas industry; • our business may be adversely affected by changes in government policies, laws and regulations in the UAE; • we may be required to be listed in the UAE; and • the economic, political and social conditions in MENA and China, as well as government policies, laws and regulations, could affect our business, financial condition and results of operations.
Risks Relating to Doing Business in Certain Countries and Regions We are subject to risks and uncertainties relating to doing business in certain countries and regions in general, including, but are not limited to, the following: • investments in emerging markets are subject to greater risks than those in more developed markets; • the economies of a number of our markets in MENA are highly dependent upon the oil and gas industry; • our business may be adversely affected by changes in government policies, laws and regulations in the UAE; • we may be required to be listed in the UAE; and • the economic, political and social conditions in MENA and China, as well as government policies, laws and regulations, could affect our business, financial condition and results of operations.
Inconsistent interpretation or implementation in relation to existing laws and regulations could restrict our ability to offer our mobile platform in the relevant jurisdictions, which could materially and adversely affect our business, financial condition and results of operations.
Existing laws and regulations may be applied inconsistently with anomalies in their interpretation or implementation. Inconsistent interpretation or implementation in relation to existing laws and regulations could restrict our ability to offer our mobile platform in the relevant jurisdictions, which could materially and adversely affect our business, financial condition and results of operations.
Sales of the ADSs in the public market, or the perception that these sales could occur, could cause the market price of the ADSs to decline significantly. As of December 31, 2022, we had 131,255,019 Class A ordinary shares and 24,734,013 Class B ordinary shares outstanding.
Sales of the ADSs in the public market, or the perception that these sales could occur, could cause the market price of the ADSs to decline significantly. As of December 31, 2023, we had 133,809,094 Class A ordinary shares and 24,734,013 Class B ordinary shares outstanding.
In addition, while the PCAOB announced in December 2022 that it secured complete access to inspect and investigate registered public accounting firms headquartered in China, we cannot assure you that the PCAOB will continue to have such access in the future.
In addition, while the PCAOB announced in December 2022 and November 2023 that it secured complete access to inspect and investigate registered public accounting firms headquartered in China and completed its annual inspection and investigation in 2022 and 2023, respectively, we cannot assure you that the PCAOB will continue to have such access in the future.
Our future success depends substantially on the continued efforts of our executive officers and key employees. If one or more of our executive officers or key employees were unable or unwilling to continue their services with us, we might not be able to replace them easily, in a timely manner, or at all.
If one or more of our executive officers or key employees were unable or unwilling to continue their services with us, we might not be able to replace them easily, in a timely manner, or at all.
To manage our growth and maintain profitability, we expect our costs and expenses to continue to increase in the future as we anticipate that we will need to continue to implement, from time to time, a variety of new and upgraded operational and technology systems.
We cannot assure you that we will be successful with any of the above. 6 To manage our growth and maintain profitability, we expect our costs and expenses to continue to increase in the future as we anticipate that we will need to continue to implement, from time to time, a variety of new and upgraded operational and technology systems.
We believe that our continued growth will depend on our ability to attract and retain users, develop an infrastructure to serve and support an expanding user base, increase user engagement levels, explore new monetization avenues, and convert non-paying users to paying users, among others. We cannot assure you that we will be successful with any of the above.
We believe that our continued growth will depend on our ability to attract and retain users, develop an infrastructure to serve and support an expanding user base, increase user engagement levels, explore new monetization avenues, and convert non-paying users to paying users, among others.
We primarily generate our revenue by providing group chatting and games services. We operate our social networking and gaming platform using a revenue model whereby users can get free access to the basic functions on our platform for our group chatting service but have the options to purchase virtual currencies.
We operate our social networking and gaming platform using a revenue model whereby users can get free access to the basic functions on our platform for our group chatting service but have the options to purchase virtual currencies. Individual users consume virtual currencies to purchase virtual items and upgrade services or play games on our platform.
If such third parties increase their prices, fail to provide their services effectively, terminate their services or agreements or discontinue their relationships with us, we could suffer service interruptions, reduced revenues or increased costs, any of which may have a material adverse effect on our business, financial condition and results of operations.
If such third parties increase their prices, fail to provide their services effectively, terminate their services or agreements or discontinue their relationships with us, we could suffer service interruptions, reduced revenues or increased costs, any of which may have a material adverse effect on our business, financial condition and results of operations. 10 We face risks related to health epidemics, pandemics, natural disasters and other outbreaks, which could significantly disrupt our operations.
Individual users consume virtual currencies to purchase virtual items and upgrade services or play games on our platform. Virtual items primarily consist of various virtual gifts and privileges in chat rooms or games. Upgrade services primarily consist of VIP rights or premium membership on our platform.
Virtual items primarily consist of various virtual gifts and privileges in chat rooms or games. Upgrade services primarily consist of VIP rights or premium membership on our platform.
Regulatory authorities in various jurisdictions oversee different aspects of our business operations. We are required to obtain a number of licenses, approvals, permits, registrations and filings and are subject to certain reporting obligations required for maintaining our subsidiaries and personnel in such jurisdictions.
We are required to obtain a number of licenses, approvals, permits, registrations and filings and are subject to certain reporting obligations required for maintaining our subsidiaries and personnel in such jurisdictions.
We recognized share-based compensation expenses in the amount of US$26.7 million in 2022. As of December 31, 2022, the total unrecognized compensation expense associated with share options amounted to US$25.3 million.
We recognized share-based compensation expenses in the amount of US$17.9 million in 2023. As of December 31, 2023, the total unrecognized compensation expense associated with share options amounted to US$22.3 million.
Furthermore, we may need to comply with regulations in other territories that may impose further onerous compliance requirements, such as data localization, which prohibits companies from storing data relating to resident individuals in data centers outside the jurisdiction. The proliferation of such laws within jurisdictions and countries in which we operate may result in conflicting and contradictory requirements.
Furthermore, we may need to comply with regulations in other territories that may impose further onerous compliance requirements, such as data localization, which prohibits companies from storing data relating to resident individuals in data centers outside the jurisdiction.
In practice, the main enforcement action taken against unlicensed VoIP service providers is for the licensed service providers to block the VoIP service in the UAE. 17 There are uncertainties in the UAE market regarding the use of VoIP services, as despite the apparently strict legal position concerning the use of VoIP services and the blocking of certain well-known international VoIP service brands in the UAE, many users in the UAE can in fact use various other VoIP applications, such as certain online gaming platforms.
There are uncertainties in the UAE market regarding the use of VoIP services, as despite the apparently strict legal position concerning the use of VoIP services and the blocking of certain well-known international VoIP service brands in the UAE, many users in the UAE can in fact use various other VoIP applications, such as certain online gaming platforms.
We have determined that the costs of insuring for these risks and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for us to have such insurance.
We do not have any business liability or disruption insurance to cover our operations. We have determined that the costs of insuring for these risks and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for us to have such insurance.
The rights of shareholders to take action against our directors, actions by minority shareholders and the fiduciary duties of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands.
Our corporate affairs are governed by our memorandum and articles of association, the Companies Act (As Revised) of the Cayman Islands and the common law of the Cayman Islands. 35 The rights of shareholders to take action against our directors, actions by minority shareholders and the fiduciary duties of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands.
Our revenues increased by 102.4% from US$134.9 million in 2020 to US$273.1 million in 2021, and further increased by 11.2% to US$303.6 million in 2022.
Our revenues increased by 11.2% from US$273.1 million in 2021 to US$303.6 million in 2022, and further increased by 5.0% to US$318.9 million in 2023.
If any of the above were to occur and damage our reputation or the perceived security of the payment platforms we use, we may lose paying users and users may be discouraged from spending on our platform, which may have a material adverse effect on our business.
If any of the above were to occur and damage our reputation or the perceived security of the payment platforms we use, we may lose paying users and users may be discouraged from spending on our platform, which may have a material adverse effect on our business. 14 In addition, there are currently only a limited number of reputable third-party payment systems in our target markets.
We may have limited ability to monitor or control the actions of these third parties and, to the extent any of these strategic third parties suffers negative publicity or harm to their reputation from events relating to their business, we may also suffer negative publicity or harm to our reputation by virtue of our association with any such third party. 21 In addition, when appropriate opportunities arise, we may acquire additional technologies, businesses or assets that are complementary to our existing business.
We may have limited ability to monitor or control the actions of these third parties and, to the extent any of these strategic third parties suffers negative publicity or harm to their reputation from events relating to their business, we may also suffer negative publicity or harm to our reputation by virtue of our association with any such third party.
If the use of the Internet or mobile Internet is reduced as a result of these or other issues, then demand for our platform could decline, which could adversely affect our revenue, business, results of operations and financial condition. 14 Concerns about collection, use, retention, transfer, disclosure, processing and security of personal data could damage our reputation and deter current and potential users from using our platform and services, or subject us to significant compliance costs or penalties, which could materially and adversely affect our business, financial condition and results of operations.
Concerns about collection, use, retention, transfer, disclosure, processing and security of personal data could damage our reputation and deter current and potential users from using our platform and services, or subject us to significant compliance costs or penalties, which could materially and adversely affect our business, financial condition and results of operations.
We have limited business insurance coverage, so that any uninsured occurrence of business disruption may result in substantial costs to us and the diversion of our resources, which could have an adverse effect on our results of operations and financial condition.
We have limited business insurance coverage, so that any uninsured occurrence of business disruption may result in substantial costs to us and the diversion of our resources, which could have an adverse effect on our results of operations and financial condition. 21 Insurance companies in the UAE and China currently do not offer as extensive an array of insurance products as insurance companies do in more developed economies.
We cannot predict the effect of future developments in the PRC legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the preemption of local regulations by national laws. These uncertainties could limit the legal protections available to us and other foreign investors, including you.
We cannot predict the effect of future developments in the PRC legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the preemption of local regulations by national laws.
These claims could result in litigation and could require us to make our software source code freely available, purchase a costly license or cease offering the implicated services unless and until we can re-engineer them to avoid infringement.
These claims could result in litigation and could require us to make our software source code freely available, purchase a costly license or cease offering the implicated services unless and until we can re-engineer them to avoid infringement. This re-engineering process could require significant additional technology and product development resources, and we may not be able to complete it successfully.
Therefore, recognition and enforcement in China of judgments of a court in any of these jurisdictions other than Hong Kong in relation to any matter not subject to binding arbitration provisions may be difficult or impossible.
Therefore, recognition and enforcement in China of judgments of a court in any of these jurisdictions other than Hong Kong in relation to any matter not subject to binding arbitration provisions may be difficult. It may also be difficult for you or regulators outside of the PRC to conduct investigations or collect evidence within China.
It may become increasingly difficult to maintain and improve the performance of our platform, particularly during peak usage times, as our services become more complex and as our user base increases. 9 We use third-party services and technologies in connection with our business, and any disruption to the provision of these services and technologies to us could result in negative publicity and a slowdown in the growth of our user base, which could materially and adversely affect our business, financial condition and results of operations.
We use third-party services and technologies in connection with our business, and any disruption to the provision of these services and technologies to us could result in negative publicity and a slowdown in the growth of our user base, which could materially and adversely affect our business, financial condition and results of operations.
Following the Statement of Protocol signed between the PCAOB and the China Securities Regulatory Commission and the Ministry of Finance of the PRC in August 2022 and the on-site inspections and investigations conducted by the PCAOB staff in Hong Kong from September to November 2022, the PCAOB Board voted in December 2022 to vacate the previous 2021 determinations, and as a result, our auditor, KPMG Huazhen LLP, is no longer a registered public accounting firm that the PCAOB is unable to inspect or investigate completely as of the date of this annual report or at the time of issuance of the audit report included herein.
After we filed our annual report on Form 20-F for the fiscal year ended December 31, 2021 that included an audit report issued by KPMG Huazhen LLP on April 25, 2022, the SEC conclusively identified us as an SEC-identified issuer on May 26, 2022. 3 Following the Statement of Protocol signed between the PCAOB and the China Securities Regulatory Commission and the Ministry of Finance of the PRC in August 2022 and the on-site inspections and investigations conducted by the PCAOB staff in Hong Kong from September to November 2022, the PCAOB Board voted in December 2022 to vacate the previous 2021 determinations, and as a result, our auditor, KPMG Huazhen LLP, was no longer a registered public accounting firm that the PCAOB was unable to inspect or investigate completely as of the date of our annual report for the fiscal year ended December 31, 2022 and we were not identified as an SEC-identified issuer in 2023.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected. 20 If we are unable to maintain proper and effective internal controls, we may not be able to produce timely and accurate financial statements.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.
Our average MAUs increased from 16.4 million in the three months ended December 31, 2020 to 28.1 million in the same period of 2021, and further increased to 32.0 million in the same period of 2022. Our paying users experienced similar rapid growth during the period.
Our average MAUs increased from 28.1 million in the three months ended December 31, 2021 to 32.0 million in the same period of 2022, and further increased to 36.2 million in the same period of 2023.
We may be subject to intellectual property or other third-party rights infringement claims, which could be time-consuming and costly to defend and may result in diversion of our financial and management resources. We may be subject to intellectual property or other third-party rights infringement claims, particularly in relation to content generated by our users on our mobile applications.
We may be subject to intellectual property or other third-party rights infringement claims, particularly in relation to content generated by our users on our mobile applications.
We face risks related to health epidemics, pandemics, natural disasters and other outbreaks, which could significantly disrupt our operations. Our business could be adversely affected by the effects of epidemics or pandemics. In recent years, there have been outbreaks of epidemics in MENA, China and globally.
Our business could be adversely affected by the effects of epidemics or pandemics. In recent years, there have been outbreaks of epidemics in MENA, China and globally.
Shareholder claims that are common in the United States, including securities law class actions and fraud claims, generally are difficult to pursue as a matter of law or practicality in China. For example, in China, there are significant legal and other obstacles to providing information needed for regulatory investigations or litigation initiated outside China.
Shareholder claims that are common in the United States, including securities law class actions and fraud claims, generally are difficult to pursue as a matter of law or practicality in China.
A significant reduction in registered, active or paying user numbers could lead to lower revenues, which could have a material and adverse effect on our business, financial condition and results of operations. 16 If we fail to prevent security breaches, cyber-attacks or other unauthorized access to our systems or our users’ data, we may be exposed to significant consequences, including legal and financial exposure and loss of users, and our reputation, business and operating results may be materially and adversely affected.
If we fail to prevent security breaches, cyber-attacks or other unauthorized access to our systems or our users’ data, we may be exposed to significant consequences, including legal and financial exposure and loss of users, and our reputation, business and operating results may be materially and adversely affected.
Furthermore, if we were unable to comply with the relevant listing requirements in the UAE, we could be subject to penalties, and our results of operations, reputation and business would be adversely affected.
Furthermore, if we were unable to comply with the relevant listing requirements in the UAE, we could be subject to penalties, and our results of operations, reputation and business would be adversely affected. 24 The economic, political and social conditions in MENA and China, as well as government policies, laws and regulations, could affect our business, financial condition and results of operations.
Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands, the UAE, China or other relevant jurisdiction may render you unable to enforce a judgment against our assets or the assets of our directors and officers. 35 You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.
Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands, the UAE, China or other relevant jurisdiction may render you unable to enforce a judgment against our assets or the assets of our directors and officers.
Based on a strict interpretation of laws and regulations, VoIP services can only be used in the UAE in limited circumstances where: • the VoIP service is provided between users of a “Closed Group Network” where the relevant calls originate and terminate in the UAE in accordance with the TDRA’s VoIP Policy; or • the VoIP service is a paid service provided through the local public telecommunications service providers licensed by the TDRA under Federal Law No 3 of 2003 Regarding The Organization of The Telecommunications Sector, as amended, or the Telecoms Law.
“VoIP Services” are defined for the purposes of the VoIP Policy as “all of the services and technologies that allow transmitting, receiving, delivering and routing of voice telecommunications by means of Internet Protocol (IP).” Yalla apps’ free voice chat function may be deemed VoIP services, as such chat function delivers voice communications and multimedia content over the Internet. 17 Based on a strict interpretation of laws and regulations, VoIP services can only be used in the UAE in limited circumstances where: • the VoIP service is provided between users of a “Closed Group Network” where the relevant calls originate and terminate in the UAE in accordance with the TDRA’s VoIP Policy; or • the VoIP service is a paid service provided through the local public telecommunications service providers licensed by the TDRA under Federal Law No 3 of 2003 Regarding The Organization of The Telecommunications Sector, as amended, or the Telecoms Law.
The SAFE promulgated the Circular on Relevant Issues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, in July 2014 that requires PRC residents or entities to register with SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. 25 Certain of our directors and officers have completed initial SAFE registration in connection with our financings in accordance with SAFE under SAFE Circular 37.
Where PRC enterprises make overseas direct investment, they shall file with or obtain the approval from the MOFCOM and NDRC, or their local counterparts, and register with the banks as well. 25 The SAFE promulgated the Circular on Relevant Issues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, in July 2014 that requires PRC residents or entities to register with SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing.
In the event that it is difficult for our users to access and use our mobile applications, particularly on their mobile devices, our user growth and user engagement could be harmed, and our business and operating results could be adversely affected. 12 User misconduct and misuse of our platform may adversely impact our brand image, and we may be held liable for information or content displayed on, retrieved from or linked to our platform, or distributed to our users, and the relevant local authorities may impose restrictions on access to our platform.
User misconduct and misuse of our platform may adversely impact our brand image, and we may be held liable for information or content displayed on, retrieved from or linked to our platform, or distributed to our users, and the relevant local authorities may impose restrictions on access to our platform.
This re-engineering process could require significant additional technology and product development resources, and we may not be able to complete it successfully. 19 Our business depends substantially on the continuing efforts of our executive officers, key employees and qualified personnel, and our business operations may be severely disrupted if we lose their services or if they are subject to litigation or regulatory investigations and proceedings.
Our business depends substantially on the continuing efforts of our executive officers, key employees and qualified personnel, and our business operations may be severely disrupted if we lose their services or if they are subject to litigation or regulatory investigations and proceedings. Our future success depends substantially on the continued efforts of our executive officers and key employees.
We cannot assure you that our employment practices have complied or will be able to comply with all labor-related laws and regulations in China. Furthermore, intellectual property rights and confidentiality protections in China may not be as effective as in the United States or other countries.
We cannot assure you that our employment practices have complied or will be able to comply with all labor-related laws and regulations in China.
Additionally, it is possible that our users may engage in illegal, obscene or incendiary conversations or activities on or through our platform that may be deemed illegal under the relevant local laws and regulations or inappropriate under local cultures or customs, for which we may be subject to potential liability.
As a result, our ability to retain or increase our user base and user engagement may be adversely affected, we may not be able to maintain or grow our revenues as anticipated, and our business prospects and financial results could be adversely affected. 13 Additionally, it is possible that our users may engage in illegal, obscene or incendiary conversations or activities on or through our platform that may be deemed illegal under the relevant local laws and regulations or inappropriate under local cultures or customs, for which we may be subject to potential liability.
In particular, the armed conflicts in Syria, Iraq and Yemen have the potential to further destabilize the region, further increase uncertainty and have a material negative impact on the regional economy. In mid-2017, Bahrain, Saudi Arabia, the UAE and certain other countries imposed sanctions on Qatar, which remain in place.
In particular, the armed conflicts in Syria, Iraq and Yemen have the potential to further destabilize the region, further increase uncertainty and have a material negative impact on the regional economy.
Regardless of whether we can successfully enforce our rights against these platforms, any measures that we may take could require significant financial or other resources from us. Those platforms may also lure away some of our users or reduce our market share, causing material and adverse effects to our business operations.
Regardless of whether we can successfully enforce our rights against these platforms, any measures that we may take could require significant financial or other resources from us.
Continued growth would put strains on our ability to maintain reliable service levels for all of our users. Managing our growth will require significant expenditures and involve the allocation of valuable management resources.
Continued growth would put strains on our ability to maintain reliable service levels for all of our users. Managing our growth will require significant expenditures and involve the allocation of valuable management resources. If we fail to achieve the necessary level of efficiency in our organization as we grow, our business, operating results and financial condition could be harmed.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeThese include taking appropriate technical and organizational measures to protect personal data (and manage automatic processing to ensure it is limited to its intended purpose); maintaining a “special record” of personal data (and making it available to the Data Office on request along with any other information the Data Office requires); and ensuring processors provide sufficient guarantees and implement technical and organizational measures necessary to meet the requirements of the UAE DP Law. 54 Similar to other global data protection laws, data subjects have various rights: the right to data portability; right to the rectification or erasure of personal data (i.e. the right to be forgotten); the right to restrict personal data processing; the right to object to personal data processing (e.g. for marketing purposes); and the right to object to decisions resulting from automated processing (including profiling) that have legal consequences or seriously affect the data subject.
Biggest changeThese include taking appropriate technical and organizational measures to protect personal data (and manage automatic processing to ensure it is limited to its intended purpose); maintaining a “special record” of personal data (and making it available to the Data Office on request along with any other information the Data Office requires); and ensuring processors provide sufficient guarantees and implement technical and organizational measures necessary to meet the requirements of the UAE DP Law.
FYXTECH HK Limited in turn became the holding company of two operating subsidiaries in the PRC, namely Hangzhou Yale Technology Co., Ltd., or Hangzhou Yale, and Shenzhen Moov Technology Co., Ltd, or Shenzhen Moov, which were established in June 2018 and October 2019, respectively.
FYXTECH HK Limited in turn became the holding company of two operating subsidiaries in the PRC, namely Hangzhou Yale Technology Co., Ltd. and Shenzhen Moov Technology Co., Ltd, or Shenzhen Moov, which were established in June 2018 and October 2019, respectively.
Further, on August 25, 2011, MOFCOM promulgated the Regulations on Implementation of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors, or the MOFCOM Security Review Regulations, which became effective on September 1, 2011, to implement Circular 6.
Further, on August 25, 2011, the MOFCOM promulgated the Regulations on Implementation of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors, or the MOFCOM Security Review Regulations, which became effective on September 1, 2011, to implement Circular 6.
Under Circular 6 and the MOFCOM Security Review Regulations, if MOFCOM decides that a specific merger or acquisition is subject to security review, it will submit it to the Inter-Ministerial Panel, an authority established under the Circular 6, to carry out the security review.
Under Circular 6 and the MOFCOM Security Review Regulations, if the MOFCOM decides that a specific merger or acquisition is subject to security review, it will submit it to the Inter-Ministerial Panel, an authority established under the Circular 6, to carry out the security review.
The juristic person shall be jointly held liable for the judged fines or remedies, if the offence is committed by an employee, in name and in favor of the juristic person.” As such, the CCL may apply to either a party that hosts user uploaded content or the party that creates and uploads the content within a chat room or an online voice communication application, or both.” 53 Further, Article 59 of the CCL authorizes a competent authority to issue a takedown notice, and any party that has received such notice is required to respond to the relevant authority.
The juristic person shall be jointly held liable for the judged fines or remedies, if the offence is committed by an employee, in name and in favor of the juristic person.” As such, the CCL may apply to either a party that hosts user uploaded content or the party that creates and uploads the content within a chat room or an online voice communication application, or both.” Further, Article 59 of the CCL authorizes a competent authority to issue a takedown notice, and any party that has received such notice is required to respond to the relevant authority.
Article 45(7) states that “the identity of the advertisement must be made clear and be presented as they are special and independent from the other advertising and editing materials or items, and borders must be placed to separate such advertisement from any other material or item as well as intervals or time breaks in case of TV and radio broadcasting.” 51 The Guidelines for Advertising, issued in 2018, provide a summary of laws applicable to advertising.
Article 45(7) states that “the identity of the advertisement must be made clear and be presented as they are special and independent from the other advertising and editing materials or items, and borders must be placed to separate such advertisement from any other material or item as well as intervals or time breaks in case of TV and radio broadcasting.” The Guidelines for Advertising, issued in 2018, provide a summary of laws applicable to advertising.
The M&A Rules, among other things, require that (i) PRC entities or individuals obtain MOFCOM approval before they establish or control an SPV overseas, provided that they intend to use the SPV to acquire their equity interests in a PRC company at the consideration of newly issued share of the SPV, or Share Swap, and list their equity interests in the PRC company overseas by listing the SPV in an overseas market; (ii) the SPV obtains MOFCOM’s approval before it acquires the equity interests held by the PRC entities or PRC individual in the PRC company by Share Swap; and (iii) the SPV obtains CSRC approval before it lists overseas.
The M&A Rules, among other things, require that (i) PRC entities or individuals obtain the MOFCOM’s approval before they establish or control an SPV overseas, provided that they intend to use the SPV to acquire their equity interests in a PRC company at the consideration of newly issued share of the SPV, or Share Swap, and list their equity interests in the PRC company overseas by listing the SPV in an overseas market; (ii) the SPV obtains the MOFCOM’s approval before it acquires the equity interests held by the PRC entities or PRC individual in the PRC company by Share Swap; and (iii) the SPV obtains CSRC approval before it lists overseas.
We currently use servers provided by industry-leading cloud service providers that are hosted mainly in data centers in Germany, the United States and Singapore, and we also store data locally in Oman, Qatar and UAE. Our cloud-based network infrastructure provides high quality data delivery and allows multiple users to interact online from anywhere in the world conveniently in real time.
We currently use servers provided by industry-leading cloud service providers that are hosted mainly in data centers in Germany and the United States, and we also store data locally in Oman, Qatar and UAE. Our cloud-based network infrastructure provides high quality data delivery and allows multiple users to interact online from anywhere in the world conveniently in real time.
An overseas listing will constitute an “indirect listing” where the issuer meets both of the following conditions: (i) 50% or more of the issuer’s operating revenue, total profit, total assets or net assets for the most recent accounting year is accounted for by its PRC subsidiaries; and (ii) main parts of the business activities are conducted within mainland China, or main place of business are located in mainland China, or a majority of the senior managers in charge of business operation and management are Chinese citizens or domiciled in mainland China. 65 Regulations Related to Leasing Pursuant to the Law on Administration of Urban Real Estate which took effect in January 1995 with the latest amendment in August 2019, lessors and lessees are required to enter into a written lease contract and both lessor and lessee are also required to register the lease with the real estate administration authorities.
An overseas listing will constitute an “indirect listing” where the issuer meets both of the following conditions: (i) 50% or more of the issuer’s operating revenue, total profit, total assets or net assets for the most recent accounting year is accounted for by its PRC subsidiaries; and (ii) main parts of the business activities are conducted within mainland China, or main place of business are located in mainland China, or a majority of the senior managers in charge of business operation and management are Chinese citizens or domiciled in mainland China. 67 Regulations Related to Leasing Pursuant to the Law on Administration of Urban Real Estate which took effect in January 1995 with the latest amendment in August 2019, lessors and lessees are required to enter into a written lease contract and both lessor and lessee are also required to register the lease with the real estate administration authorities.
The Labor Law also sets out specific instances where compensation may be awarded to an employee who is found to have been unlawfully dismissed (essentially, circumstances of victimization), as defined under the Labor Law. Such compensation, if awarded, would be awarded by the courts and may not exceed the equivalent of three months’ salary.
The Labor Law also sets out specific instances where compensation may be awarded to an employee who is found to have been unlawfully dismissed (essentially, circumstances of victimization), as defined under the Labor Law. Such compensation, if awarded, would be awarded by the courts and may not exceed the equivalent of three months’ fixed salary.
However, in practice the Emirate-level CIT has only been imposed on companies engaged in upstream oil and gas activities and branches of foreign banks. Free zones in the UAE, including the DCC free zone, provide for an exemption from Emirate-level corporate taxes for 15 to 50 years depending on the free zone.
However, in practice the Emirate-level CIT has only been imposed on companies engaged in upstream oil and gas activities and branches of foreign banks. Free zones in the UAE, including the DCC free zone, provide for an exemption from certain Emirate-level corporate taxes for 15 to 50 years depending on the free zone.
According to the Interim Regulation on VAT and Detailed Rules for the Implementation of the Interim Regulation on VAT, entities and individuals selling goods in the PRC or providing processing services, repair services and importation services should be subject to VAT, and the payable tax amount shall be calculated by deducting input tax for the current period from output tax for the current period. 63 The Notice of Taxation on Implementing the Pilot Program of Replacing Business Tax with VAT in an All-round Manner was issued jointly by the MOF and SAT on March 23, 2016, partly amended by the MOF, SAT and the General Administration of Customs on March 20, 2019 and became effective on April 1, 2019, according to which the countrywide pilot practice of levying VAT in lieu of business tax, or the Pilot Practice, has been carried out since May 1, 2016.
According to the Interim Regulation on VAT and Detailed Rules for the Implementation of the Interim Regulation on VAT, entities and individuals selling goods in the PRC or providing processing services, repair services and importation services should be subject to VAT, and the payable tax amount shall be calculated by deducting input tax for the current period from output tax for the current period. 65 The Notice of Taxation on Implementing the Pilot Program of Replacing Business Tax with VAT in an All-round Manner was issued jointly by the MOF and SAT on March 23, 2016, partly amended by the MOF, SAT and the General Administration of Customs on March 20, 2019 and became effective on April 1, 2019, according to which the countrywide pilot practice of levying VAT in lieu of business tax, or the Pilot Practice, has been carried out since May 1, 2016.
In practice, the main enforcement action taken against unlicensed VoIP service providers is for the Licensees to block the VoIP service in the UAE. Our mobile applications, which enable voice-based, real-time communications on the Internet, may be deemed to be VoIP services. See “Item 3. Key Information—D.
In practice, the main enforcement action taken against unlicensed VoIP service providers is for the Licensees to block the VoIP service in the UAE. 56 Our mobile applications, which enable voice-based, real-time communications on the Internet, may be deemed to be VoIP services. See “Item 3. Key Information—D.
To incentivize gifting, we have created rankings to recognize users who have given the most gifts, as well as users who have received the most gifts, and we refresh these rankings on a real-time basis. • Additional Interactive Features . Amir also explores other interactive features that make Yalla rooms lively.
To incentivize gifting, we have created rankings to recognize users who have given the most gifts, as well as users who have received the most gifts, and we refresh these rankings on a real-time basis. 42 • Additional Interactive Features . Amir also explores other interactive features that make Yalla rooms lively.
A screenshot of these interactive features is set forth below. 42 Room recommendations among friends are an effective way for users to find interesting rooms, thereby making these rooms more lively. Amir can recommend Yalla rooms to his friends by sending them room invitations.
A screenshot of these interactive features is set forth below. Room recommendations among friends are an effective way for users to find interesting rooms, thereby making these rooms more lively. Amir can recommend Yalla rooms to his friends by sending them room invitations.
End-of-service gratuity is calculated based on basic salary with reference to a statutory formula. Essentially, it equates to 21 calendar days’ pay for each of the first 5 years of service and 30 calendar days’ pay for each year of service after that, with a pro-rated amount for part-years of service.
End-of-service gratuity is calculated based on basic salary with reference to a statutory formula. Essentially, it equates to 21 calendar days’ basic salary for each of the first 5 years of service and 30 calendar days’ basic salary for each year of service after that, with a pro-rated amount for part-years of service.
Certain Emirates in the UAE, such as Dubai, have a CIT at the Emirates level. Under these Emirate-level decrees, CIT is imposed on the net income generated by bodies corporate and branches operating in the Emirate, at progressive rates of up to 55%.
Furthermore, certain Emirates in the UAE, such as Dubai, have a CIT at the Emirates level. Under these Emirate-level decrees, CIT is imposed on the net income generated by bodies corporate and branches operating in the Emirate, at progressive rates of up to 55%.
The Copyright Law provides for the protection of copyright for a duration of the life of the author plus 50 years after his or her death (in which case the rights pass on to his or her next of kin). Registration is not a prerequisite to legal protection under the Copyright Law.
The Copyright Law provides for the protection of copyright for a duration of the life of the author plus 50 years after his or her death (in which case the rights pass on to his or her next of kin). 58 Registration is not a prerequisite to legal protection under the Copyright Law.
While we intend to closely monitor the evolving laws and regulations in this area and take all reasonable measures to mitigate compliance risks, we cannot guarantee that our business and operations will not be adversely affected by the potential impact of the laws and regulations related to privacy, data protection and information security in China. 67 Others The GDPR, which came into effect on May 25, 2018, increased our burden of regulatory compliance and requires us to change certain of our privacy and data security practices in order to achieve compliance.
While we intend to closely monitor the evolving laws and regulations in this area and take all reasonable measures to mitigate compliance risks, we cannot guarantee that our business and operations will not be adversely affected by the potential impact of the laws and regulations related to privacy, data protection and information security in China. 69 Others The GDPR, which came into effect on May 25, 2018, increased our burden of regulatory compliance and requires us to change certain of our privacy and data security practices in order to achieve compliance.
Finally, the UAE DP Law does not apply to the use of personal data for personal purposes by a data subject. Personal data can only be processed with the consent of the data subject except in certain limited circumstances.
Finally, the UAE DP Law does not apply to the use of personal data for personal purposes by a data subject. 54 Personal data can only be processed with the consent of the data subject except in certain limited circumstances.
The Implementation Rules of the Foreign Investment Law provides that foreign-invested enterprises and other domestic enterprises shall be equally treated with respect to, among others, the allocation of governmental funding, land supply, tax treatment, licensing and permits. 61 Regulations related to foreign investment restrictions Investments in the PRC by foreign investors and foreign-invested enterprises were regulated by the Guidance Catalog of Industries for Foreign Investment, or the Catalog, promulgated by the NDRC and the MOFCOM on June 28, 1995, and most recently amended on June 28, 2017.
The Implementation Rules of the Foreign Investment Law provides that foreign-invested enterprises and other domestic enterprises shall be equally treated with respect to, among others, the allocation of governmental funding, land supply, tax treatment, licensing and permits. 63 Regulations related to foreign investment restrictions Investments in the PRC by foreign investors and foreign-invested enterprises were regulated by the Guidance Catalog of Industries for Foreign Investment, or the Catalog, promulgated by the NDRC and the MOFCOM on June 28, 1995, and most recently amended on June 28, 2017.
Where an employer fails to pay up housing funds within the prescribed time limit, the employer may be fined and ordered to make payment within a certain period. 64 Regulations Related to Employee Stock Incentive Plan SAFE promulgated the Circular of the State Administration of Foreign Exchange on Issues concerning the Administration of Foreign Exchange Used for Domestic Individuals’ Participation in Equity Incentive Plans of Companies Listed Overseas, or the Stock Option Rules in February 2012.
Where an employer fails to pay up housing funds within the prescribed time limit, the employer may be fined and ordered to make payment within a certain period. 66 Regulations related to employee stock incentive plan SAFE promulgated the Circular of the State Administration of Foreign Exchange on Issues concerning the Administration of Foreign Exchange Used for Domestic Individuals’ Participation in Equity Incentive Plans of Companies Listed Overseas, or the Stock Option Rules in February 2012.
(10) of 2018, amending the Dubai Creative Clusters Authority, Dubai Creative Clusters free zone was renamed as DDA free zone and consequently the authority governing it was renamed as the DDA. The DDA is the primary regulator of the DDA free zone, which comprises numerous clusters including Dubai Internet City.
(10) of 2018, amending the Dubai Creative Clusters Authority, Dubai Creative Clusters free zone was renamed as the DDA free zone and consequently the authority governing it was renamed as the DDA. 49 The DDA is the primary regulator of the DDA free zone, which comprises numerous clusters including Dubai Internet City.
Pursuant to the Regulations, critical information infrastructure or “CIIO” shall mean the important network facilities or information systems of key industries or fields such as public communication and information service, energy, transportation, water conservation, finance, public services, e-government affairs and national defense science, and important network facilities or information systems which may endanger national security, people’s livelihood and public interest once there occur damage, malfunctioning or data leakage to them.
Pursuant to the Regulations, critical information infrastructure, or CIIO, shall mean the important network facilities or information systems of key industries or fields such as public communication and information service, energy, transportation, water conservation, finance, public services, e-government affairs and national defense science, and important network facilities or information systems which may endanger national security, people’s livelihood and public interest once there occur damage, malfunctioning or data leakage to them.
Offending content may include pornography, gambling, defamation, breach of privacy, sedition and similar incitements, and promotion of weapons. Advertising and commercial content Advertising is primarily regulated under the 2017 Content Resolution.
Offending content may include pornography, gambling, defamation, breach of privacy, sedition and similar incitements, and promotion of weapons. 51 Advertising and commercial content Advertising is primarily regulated under the 2017 Content Resolution.
However, entities incorporated or registered in free zones that are considered qualifying free zone persons will be preserved subject to 0% tax on their qualifying income.
However, entities incorporated or registered in free zones that are considered qualifying free zone persons will be subject to 0% tax on their qualifying income.
Violations of SAFE Circular 19 or SAFE Circular 16 could result in administrative penalties. 62 Regulations related to foreign exchange registration of overseas investment by PRC resident SAFE promulgated the Circular on Relevant Issues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, in July 2014.
Violations of SAFE Circular 19 or SAFE Circular 16 could result in administrative penalties. 64 Regulations related to foreign exchange registration of overseas investment by PRC resident SAFE promulgated the Circular on Relevant Issues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, in July 2014.
The UAE’s criminal defamation provisions are contained in different legislations. The most prominent one is the UAE Penal Code, Federal Decree Law No. (31) of 2021 (“UAE Penal Code”). In case defamation occurred verbally in the presence of others or through physical letters/publications, the provisions of Article 425 and 427 of the UAE Penal Code will apply.
The UAE’s criminal defamation provisions are contained in different legislations. The most prominent one is the UAE Penal Code, Federal Decree Law No. (31) of 2021, or the UAE Penal Code. In case defamation occurred verbally in the presence of others or through physical letters/publications, the provisions of Article 425 and 427 of the UAE Penal Code will apply.
Yalla UAE functions as our primary business operation center and engages in sales, marketing, customer service and other business operations. Shenzhen Moov primarily performs marketing and financial reporting functions. Hangzhou Yale and Hangzhou Chengyu both perform technology and product development functions. YG Technology performs game launching functions. Shenzhen Moojo and Shenzhen Moojoyo both perform gaming operational support functions. D.
Yalla UAE functions as our primary business operation center and engages in sales, marketing, customer service and other business operations. Shenzhen Moov primarily performs marketing and financial reporting functions. Hangzhou Yale Information performs technology and product development functions. YG Technology performs game launching functions. Shenzhen Moojo and Shenzhen Moojoyo both perform gaming operational support functions. D.
While applications for visas within the DIC are made to the DDA, it is ultimately the federal immigration authority that grants these visas to the employees of companies in the DIC. The DDA is also authorized to impose fines on companies for failure to comply with the Labor Law or the Employment Regulations.
While applications for visas within the DIC are made to the DDA, it is ultimately the federal immigration authority that grants these visas to the employees of companies in the DIC. The DDA (as well as the immigration authority) is also authorized to impose fines on companies for failure to comply with the Labor Law or the Employment Regulations.
In addition to the DDA Regulations, the DDA free zone authority (“ DDA ”), which is the authority that governs the DDA free zone has issued several rules and regulations governing companies set up in the DDA free zone, concerning employment matters, broadcasting and publishing regulations, fit-out guidelines, etc. which are to be adhered to by companies set up in the DDA free zone.
In addition to the DDA Regulations, the DDA free zone authority, or the DDA, which is the authority that governs the DDA free zone has issued several rules and regulations governing companies set up in the DDA free zone, concerning employment matters, broadcasting and publishing regulations, fit-out guidelines, etc. which are to be adhered to by companies set up in the DDA free zone.
The UAE Industrial Property Law sets out exclusions from patentability (and registration of utility models) which include: • Research on plant and animal species, and biological methods for the production of animals and plants, excluding microbiological methods and their products resulting from such processes; • Diagnostic methods, therapeutic and surgical operations needed for humans and animals; • Scientific and mathematical principles, discoveries and methods; • Guidelines, rules or methods followed to conduct business, perform mental activities or play games; • Natural materials from the environment (those substances that are purified or isolated from the natural environment); and • Inventions that may lead to violation of public order or morals, or harmful to the health and life of humans and the environment.
Exclusions The UAE Industrial Property Law sets out exclusions from patentability (and registration of utility models) which include: • plant and animal species (including research into such), and biological methods for the production of animals and plants, excluding microbiological methods and their products resulting from such processes; • diagnostic methods, therapeutic and surgical operations needed for humans and animals; • scientific and mathematical principles, discoveries and methods; • guidelines, rules, computer programs or methods followed to conduct business, perform mental activities or play games; • natural materials from the environment (those substances that are purified or isolated from the natural environment); and • inventions that may lead to violation of public order or morals, or harmful to the health and life of humans and the environment.
The defined term “de facto management bodies” are “ establishments that carry out substantial and overall management and control over production and operations, personnel, accounting, and properties” of the enterprise. If an enterprise is considered a PRC resident enterprise under the above definition, its global income will be subject to enterprise income tax at the rate of 25%.
The defined term “de facto management bodies” are “establishments that carry out substantial and overall management and control over production and operations, personnel, accounting, and properties” of the enterprise. If an enterprise is considered a PRC resident enterprise under the above definition, its global income will be subject to enterprise income tax at the rate of 25%.
Besides, data processors that are listed overseas shall carry out an annual data security assessment. 66 On July 30, 2021, the State Council issued the Regulations on Protection of Critical Information Infrastructure, or the Regulations.
Besides, data processors that are listed overseas shall carry out an annual data security assessment. 68 On July 30, 2021, the State Council issued the Regulations on Protection of Critical Information Infrastructure, or the Regulations.
SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment in February 2015, which took effect on June 1, 2015, and partly amended in December 2019.
SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment in February 2015, which took effect on June 1, 2015, and partly amended in December 2019 and in March 2023.
Free Zone Regulations Our subsidiaries in the UAE are located in the Dubai Development Authority free zone (“ DDA free zone ”), in the Dubai Internet City cluster, and are therefore governed by the Dubai Creative Clusters Private Companies Regulations 2016 (“ DDA Regulations ”).
Free Zone Regulations Our subsidiaries in the UAE are located in the Dubai Development Authority free zone, or the DDA free zone, in the Dubai Internet City cluster, and are therefore governed by the Dubai Creative Clusters Private Companies Regulations 2016, or the DDA Regulations.
Article 5 in the Federal Law No (32) of 2021 on Commercial Companies, or the UAE Companies Law, states that the provisions of the UAE Companies Law shall not apply to companies established in the free zones if a special provision to this effect is contained in the laws or regulations of the relevant free zone.
Article 5 in the Federal Law No (32) of 2021 on Commercial Companies, or the UAE Companies Law, which is the federal law governing commercial companies established in the UAE mainland, states that the provisions of the UAE Companies Law shall not apply to companies established in the free zones if a special provision to this effect is contained in the laws or regulations of the relevant free zone.
Under the current Labor Law, there is no longer any provision for forfeiture or reduction of end-of-service gratuity entitlement in certain termination circumstances. As such, provided they have completed the requisite one year’s employment, any non-UAE or GCC-national employee will be entitled to an end of service gratuity payment on termination of employment, whatever the reason for termination.
Under the current Labor Law, there is no longer any provision for forfeiture or reduction of end-of-service gratuity entitlement in certain termination circumstances. As such, provided an employee has completed the requisite one year’s employment, any non-qualifying UAE or GCC-national employee will be entitled to an end of service gratuity payment on termination of employment, whatever the reason for termination.
“VoIP Services” are defined for the purposes of the VoIP Policy as “all of the services and technologies that allow transmitting, receiving, delivering and routing of voice telecommunications by means of Internet Protocol (IP).” Based on a strict interpretation of laws and regulations, VoIP services can only be used in the UAE in limited circumstances where: • the VoIP service is provided between users of a “Closed Group Network” where the relevant calls originate and terminate in the UAE in accordance with the TDRA’s VoIP Policy; or • the VoIP service is a paid service provided through the local public telecommunications service providers licensed by the TDRA under Federal Law No 3 Of 2003 Regarding The Organization of The Telecommunications Sector, as amended, or the Telecoms Law. 55 The sale or supply of telecommunications services to subscribers in the UAE is a regulated activity under the Telecoms Law.
“VoIP Services” are defined for the purposes of the VoIP Policy as “all of the services and technologies that allow transmitting, receiving, delivering and routing of voice telecommunications by means of Internet Protocol (IP).” Based on a strict interpretation of laws and regulations, VoIP services can only be used in the UAE in limited circumstances where: • the VoIP service is provided between users of a “Closed Group Network” where the relevant calls originate and terminate in the UAE in accordance with the TDRA’s VoIP Policy; or • the VoIP service is a paid service provided through the local public telecommunications service providers licensed by the TDRA under Federal Law No 3 Of 2003 Regarding The Organization of The Telecommunications Sector, as amended, or the Telecoms Law.
SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign invested Enterprises, or the SAFE Circular 19 which was partly amended by the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or the SAFE Circular 16, effective on June 9, 2016.
SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign invested Enterprises, or the SAFE Circular 19 which was partly amended by the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or the SAFE Circular 16, effective on June 9, 2016, and partly amended on December 4, 2023.
In tandem with the Law, UAE Federal Decree-Law No. 44 of 2021 Creation of the UAE Data Office was also issued on September 20, 2021. The UAE Data Office (“Data Office”) will act as the data protection regulatory authority, operationalizing the UAE DP Law’s requirements.
In tandem with the Law, UAE Federal Decree-Law No. 44 of 2021 Creation of the UAE Data Office was also issued on September 20, 2021. The UAE Data Office, or the Data Office, will act as the data protection regulatory authority, operationalizing the UAE DP Law’s requirements.
However, in the absence of precedence and guidance from EU regulators, the application of GDPR to, and its enforcement on, Internet services providers without physical establishment in EU remains uncertain. Moreover, the implementation of the GDPR may require substantial amendments to our procedures and policies, and these changes could impact our business by increasing its operational and compliance costs.
However, in the absence of relevant precedence, the application of GDPR to, and its enforcement on, Internet services providers without physical establishment in EU remains uncertain. Moreover, the implementation of the GDPR may require substantial amendments to our procedures and policies, and these changes could impact our business by increasing its operational and compliance costs.
Data protection laws The United Arab Emirates issued Federal Decree-Law No. 45 of 2021 regarding the Protection of Personal Data (“UAE DP Law”) which came into effect on January 2, 2022. The Executive Regulations (“Regulations”) were due to be issued within six months of the date of issuance of the UAE DP Law.
Data protection laws The United Arab Emirates issued Federal Decree-Law No. 45 of 2021 regarding the Protection of Personal Data, or the UAE DP Law, which came into effect on January 2, 2022. The Executive Regulations, or the Regulations, were due to be issued within six months of the date of issuance of the UAE DP Law.
However, the Patent Office of the Gulf Cooperation Council (“GCCPO”) on January 6, 2021 stopped accepting new GCC patent applications as of the said date. All patent applications, which have been filed at the GCCPO prior to January 6, 2021, will be processed and examined as normal and the GCC Patent Office will continue to provide patent grants.
However, the Patent Office of the Gulf Cooperation Council, or the GCCPO stopped accepting new GCC patent applications on January 6, 2021. All patent applications, which have been filed at the GCCPO prior to January 6, 2021, will be processed and examined as normal and the GCC Patent Office will continue to provide patent grants.
We currently operate our business mainly through Yalla UAE, Shenzhen Moov, Hangzhou Yale, Hangzhou Chengyu, YG Technology, Shenzhen Moojo and Shenzhen Moojoyo. Yalla UAE functions as our primary business operation center and engages in sales, marketing, customer service and other business operations. Shenzhen Moov primarily performs marketing and financial reporting functions.
We currently operate our business mainly through Yalla UAE, Shenzhen Moov, Hangzhou Yale Information, YG Technology, Shenzhen Moojo and Shenzhen Moojoyo. Yalla UAE functions as our primary business operation center and engages in sales, marketing, customer service and other business operations. Shenzhen Moov primarily performs marketing and financial reporting functions. Hangzhou Yale Information performs technology and product development functions.
Hangzhou Yale and Hangzhou Chengyu both perform technology and product development functions. YG Technology performs game launching functions. Shenzhen Moojo and Shenzhen Moojoyo both perform gaming operational support functions. Our ADSs, each representing one of our Class A ordinary share, have been listed on the New York Stock Exchange since September 30, 2020 under the symbol “YALA.” B.
YG Technology performs game launching functions. Shenzhen Moojo and Shenzhen Moojoyo both perform gaming operational support functions. Our ADSs, each representing one of our Class A ordinary share, have been listed on the New York Stock Exchange since September 30, 2020 under the symbol “YALA.” B.
Regulations Relating to Intellectual Property Copyright law Copyrights are currently regulated in the UAE under the Federal Law No. 38 of 2021 on Copyright and Neighbouring Rights (“Copyrights Law”).
Regulations Relating to Intellectual Property Copyright law Copyrights are currently regulated in the UAE under the Federal Law No. 38 of 2021 on Copyright and Neighbouring Rights, or the Copyrights Law.
There are 12 categories of protected works listed by the Copyright Law, as examples: • Books, pamphlets, essays, and other written works: • Smart applications, Computer programs and applications, databases, and any other similar works to be determined by a Ministerial decision; • Lectures and similar works; • Dramatic, musical works; • Musical composition with or without words; • Sound and audio-visual works; • Architectural works, engineering plans and layouts; • Works of drawing, painting, sculpture, lithography (fabric, metal, stones, wood) and engravings or any similar works in the scope of fine arts; • Photographic works and works analogous to photography; • Works of applied art and plastic art; • Illustrations, geographical maps, sketches, three-dimensional works related to geography, topography, and architectural designs, etc.; and • Derivative works, subject to the protection afforded to the work(s) upon which they are based.
There are 12 categories of protected works listed by the Copyright Law, as examples: • books, pamphlets, essays, and other written works: • smart applications, computer programs and applications, databases, and any other similar works to be determined by a Ministerial decision; • lectures and similar works; • dramatic, musical works; • musical composition with or without words; • sound and audio-visual works; • architectural works, engineering plans and layouts; • works of drawing, painting, sculpture, lithography (fabric, metal, stones, wood) and engravings or any similar works in the scope of fine arts; • photographic works and works analogous to photography; • works of applied art and plastic art; • illustrations, geographical maps, sketches, three-dimensional works related to geography, topography, and architectural designs, etc.; and • derivative works, without prejudice to the protection conferred upon the works from which they have been derived.
C. Organizational Structure The following diagram illustrates our corporate structure as of December 31, 2022. Certain entities that are immaterial to our results of operations, business and financial condition are omitted. 68 We currently operate our business mainly through Yalla UAE, Shenzhen Moov, Hangzhou Yale, Hangzhou Chengyu, YG Technology, Shenzhen Moojo and Shenzhen Moojoyo.
C. Organizational Structure The following diagram illustrates our corporate structure as of December 31, 2023. Certain entities that are immaterial to our results of operations, business and financial condition are omitted. 70 We currently operate our business mainly through Yalla UAE, Shenzhen Moov, Hangzhou Yale Information, YG Technology, Shenzhen Moojo and Shenzhen Moojoyo.
We have been developing and implementing an individualized content recommendation engine. We established this engine based on the user behavior data that we have accumulated from 465.9 million registered users as of December 31, 2022, analyzed through our proprietary algorithms to achieve accurate user profiling.
We have been developing and implementing an individualized content recommendation engine. We established this engine based on the user behavior data that we have accumulated from 667.0 million registered users as of December 31, 2023, analyzed through our proprietary algorithms to achieve accurate user profiling.
Under the CT Law, the UAE has also introduced transfer pricing rules and requirements that largely follow the Organization for Economic Cooperation and Development (“OECD”) guidelines. 60 China Regulations Related to Foreign Investment Foreign Investment Law The establishment, operation and management of corporate entities in the PRC is governed by the Company Law of the PRC, or the Company Law, which was promulgated by the Standing Committee of the National People’s Congress, or the SCNPC, on December 29, 1993 and last amended and became effective on October 26, 2018.
Under the CT Law, the UAE has also introduced transfer pricing rules and requirements that largely follow the OECD guidelines. 62 China Regulations Related to Foreign Investment Foreign Investment Law The establishment, operation and management of corporate entities in the PRC is governed by the Company Law of the PRC, or the Company Law, which was promulgated by the Standing Committee of the National People’s Congress, or the SCNPC, on December 29, 1993 and last amended and became effective on October 26, 2018.
The Labor Law also provides for a mandatory end-of-service gratuity to be paid to non-UAE or GCC-national employees upon termination of their employment, subject to the employee having completed at least one year’s continuous employment with their employer and capped at the equivalent of two years’ gross pay.
The Labor Law also provides for a mandatory end-of-service gratuity to be paid to non-qualifying UAE or GCC-national employees upon termination of their employment, subject to the employee having completed at least one year’s continuous employment with their employer and capped at the equivalent of two years’ full pay (basic salary plus allowance).
There is currently no withholding tax in the UAE. Introduction of federal corporate tax in 2023 Notwithstanding the above, the UAE has recently issued the CT Law, pursuant to which a federal corporate tax will be implemented on taxable persons in respect of their financial periods starting on or after June 1, 2023.
Introduction of federal corporate tax in 2023 Notwithstanding the above, the UAE has issued the CT Law, pursuant to which a federal corporate tax will be implemented on taxable persons in respect of their financial periods starting on or after June 1, 2023.
Article 43 of the CCL addresses defamation and slander, and states that anyone who insults another person or attributes to him an event that may render him subject to punishment or contempt by others, by using information network, information technology method or information system shall be sentenced to detention and/or to pay fine of not less than AED 250,000 and not more than AED 500,000.
If the defamation occurred using electronic tools or platforms, it is covered by CCL. 52 Article 43 of the CCL addresses defamation and slander, and states that anyone who insults another person or attributes to him an event that may render him subject to punishment or contempt by others, by using information network, information technology method or information system shall be sentenced to detention and/or to pay fine of not less than AED 250,000 and not more than AED 500,000.
Upgrade services primarily consist of VIP rights or premium membership on our platform. Our revenues increased by 102.4% from US$134.9 million in 2020 to US$273.1 million in 2021 and further increased by 11.2% to US$303.6 million in 2022. Our innovative business model focuses on users’ interactions and social networking experience on our platform.
Upgrade services primarily consist of VIP rights or premium membership on our platform. Our revenues increased by 11.2% from US$273.1 million in 2021 to US$303.6 million in 2022 and further increased by 5.0% to US$318.9 million in 2023. Our innovative business model focuses on users’ interactions and social networking experience on our platform.
This has been confirmed in later resolutions from the National Media Council, or the NMC, the previous regulator in this area (which has now been replaced by the Ministry of Culture and Youth, or the MCY, through their Media Regulatory Office, or the MRO), in particular the Cabinet Resolution No. 23 of 2017 Concerning Media Content, or 2017 Cab Resolution, and the Chairman of the Board’s Resolution No. 26 of 2017 on Media Content, or the 2017 Content Resolution.
This will include all regulations and resolutions previously passed by the National Media Council, or the NMC, the previous regulator in this area (which has now been replaced by the Ministry of Culture and Youth, or the MCY, through their Media Regulatory Office, or the MRO), in particular the Cabinet Resolution No. 23 of 2017 Concerning Media Content, or 2017 Cab Resolution, and the Chairman of the Board’s Resolution No. 26 of 2017 on Media Content, or the 2017 Content Resolution.
The term of protection for patents is 20 years from the filing date or from the international filing date (in case of a PCT national phase application); the applicant is required to pay annual fees throughout the whole applicable duration of protection.
The term of protection for patents is twenty (20) years from the filing date or from the international filing date (in case of a PCT national phase application). A patent holder is required to pay annual fees throughout the duration of protection of a patent.
Article 53 provides that “Everyone who uses a website or an electronic account in the commission of any of the following acts shall be sentenced to pay fine of not less than (300,000) three hundred thousand Dirhams (US$81,689) and not more than (10,000,000) ten million Dirhams (US$2,722,940): 1.
Article 53 provides that “Everyone who uses a website or an electronic account in the commission of any of the following acts shall be sentenced to pay fine of not less than (300,000) three hundred thousand Dirhams (US$81,689) or more than (1,000,000) one million Dirhams (US$272,264): 1.
In 2022, we organized 36 online events in Yalla and 41 in Yalla Ludo, all of which were based on Islamic traditional festivals or localized Arabic designs to enhance user engagement and interaction. For example, during the important Islamic festival of Eid al-Adha (July 10, 2022), Amir participated in the online celebration in Yalla after completing his religious routine.
In 2023, we organized 40 online events in Yalla and 57 in Yalla Ludo, all of which were based on Islamic traditional festivals or localized Arabic designs to enhance user engagement and interaction. For example, during the important Islamic festival of Eid al-Adha (June 28, 2023), Amir participated in the online celebration in Yalla after completing his religious routine.
Economic rights are those rights through which the author can reap material benefit, including the exclusive right to reproduce the work, broadcast or rebroadcast the work, publicly perform the work, translate, modify, alter, lease, rent, lend or publish the work.
Authors derive both economic and moral rights in their work. Economic rights are those rights through which the author can reap material benefit, including the exclusive right to reproduce the work, broadcast or rebroadcast the work, publicly perform the work, translate, modify, alter, lease, rent, lend or publish the work.
As of December 31, 2022, we had 132 registered trademarks, 43 pending trademark applications and 62 registered copyrights in 48 jurisdictions, including a number of jurisdictions in MENA. As of December 31, 2022, we had 52 domain names, including yalla.com , and two invention patents. We face certain risks relating to our intellectual property. For further information, see “Item 3.
As of December 31, 2023, we had 149 registered trademarks, 16 pending trademark applications and 116 registered copyrights in 48 jurisdictions, including a number of jurisdictions in MENA. As of December 31, 2023, we had 82 domain names, including yalla.com , and two invention patents. We face certain risks relating to our intellectual property. For further information, see “Item 3.
Legal protection is automatic upon the creation of the work. In the event of enforcement of copyright against a third party, the Administrative Authorities will require a certificate of registration to be submitted alongside any complaint.
Legal protection is automatic upon the creation of the work. In the event of enforcement of copyright against a third party, the Administrative Authorities will require a certificate of registration to be submitted alongside any complaint. For this, the copyright is recommended to be registered with the UAE Ministry of Economy.
From July 7 to July 19 in 2022, our users celebrated Eid al-Adha on our platform by sending customized gifts and participating in online tasks. Approximately 3.7 million users participated in the event. Monetization 45 We primarily generate our revenue by providing group chatting and games services.
From June 23 to July 8 in 2023, our users celebrated Eid al-Adha on our platform by sending customized gifts and participating in online tasks. Approximately 4.1 million users participated in the event. 45 Monetization We primarily generate our revenue by providing group chatting and games services.
In the fourth quarter of 2022, approximately 32.0 million users visited our platform on average each month, and the number of paying users on our platform reached 12.5 million during the same period. Why Users Love Us We believe “Yalla” has become synonymous with fun and enjoyable mobile social experience in MENA.
In the fourth quarter of 2023, approximately 36.2 million users visited our platform on average each month, and the number of paying users on our platform reached 11.9 million during the same period. 38 Why Users Love Us We believe “Yalla” has become synonymous with fun and enjoyable mobile social experience in MENA.
Trade unions and collective bargaining are not recognized under the Labor Law. In addition to the Labor Law, all companies operating within Dubai Internet City (“ DIC ”) which is within the remit of the DDA, are also subject to the Dubai Technology and Media Free Zone Employment Regulations 2004, or the Employment Regulations.
Trade unions and collective bargaining are not recognized under the Labor Law. 50 In addition to the Labor Law, all companies operating within Dubai Internet City, or the DIC, which is within the remit of the DDA, are also subject to the Dubai Technology and Media Free Zone Employment Regulations 2004 as amended and/or supplemented by way of further decisions implemented by the DDA, hereinafter, the Employment Regulations.
In order to be deemed a qualifying free zone person, the free zone person must generate qualifying income, comply with transfer pricing requirements, maintain adequate substance in the UAE, and comply with any other conditions that may be set under future Cabinet Decisions. The definition of qualifying income has not yet been provided.
In order to be deemed a qualifying free zone person, the free zone person must generate qualifying income, comply with transfer pricing requirements, maintain adequate substance in the UAE, prepare and maintain audited financial statements, and comply with any other conditions that may be set under future Cabinet Decisions.
The prohibitions contained in Chapter 7 of the PPL include, among other things, no criticism of any of the rulers of the individual emirates that constitute the UAE; no instigation against Islam or the system of ruling; no harm to the interest of the state or values of society; no opinions that violate public discipline and order or circulation of subversive ideas; no instigation of criminal activity or incitement of hatred; no publication of confidential communications without permission; no blemishing of a president of, or agitating relations with, an Arab, Islamic or friendly state; no article defaming Arabs and their civilization and heritage; no news on an ongoing criminal investigation, if the judge has ordered confidentiality; no information about an individual’s private life, if such information is meant to disgrace the individual; no divulgence of a secret that may cause reputational harm; no publication to coerce payment or other benefit; no false news (with bad faith); nothing inconsistent with public order, or that is misleading to the public.
The prohibitions contained in Article 17 of the MRL include, among other things, no criticism of any of the rulers of the individual emirates that constitute the UAE; no instigation against Islam or the system of ruling; no harm to the interest of the state or values of society; no opinions that violate public interest and moral; no instigation of criminal activity or incitement of hatred; no publication of confidential communications without permission; no blemishing of a president of, or agitating relations with, an Arab, Islamic or friendly state; no article defaming Arabs and their civilization and heritage; no information about an individual’s private life, if such information is meant to disgrace the individual; no false news (with bad faith); nothing inconsistent with public order, or that is misleading to the public.
Risk Factors—Risks Relating to Our Business and Industry—We may be required to obtain and maintain licenses and approvals relating to Internet or telecommunications services in certain jurisdictions.” Consumer Protection Law In November 2020, the UAE issued a new consumer protection law, Federal Law No. (15) of 2020 on Consumer Protection.
Risk Factors—Risks Relating to Our Business and Industry—We may be required to obtain and maintain licenses and approvals relating to Internet or telecommunications services in certain jurisdictions.” Consumer Protection Law Federal Law No.
The Industrial Property Law applies to patents, integrated circuits, industrial designs, undisclosed information (trade secrets) and utility certificates (or models). The Industrial Property Law enacted is an effort to harmonize the UAE's industrial property law with international legislation.
(17) of 2002. The Industrial Property Law applies to patents, integrated circuits, industrial designs, undisclosed information (trade secrets) and utility certificates (or models). The Industrial Property Law attempts to harmonize the UAE's industrial property law with international legislation.
We also launched YallaChat, which is an IM product designed specifically for Arabic users, as we firmly believe that in the digital era, an IM product with features tailored to local users’ preferences addresses a fundamental need. In addition, we have launched Waha, a social networking product featuring 3-D avatars.
We also launched YallaChat, which is an IM product designed specifically for Arabic users, as we firmly believe that in the digital era, an IM product with features tailored to local users’ preferences addresses a fundamental need. In addition, we have launched WeMuslim, a product that supports Arabic users in observing their customs.
A foreign-invested company is also subject to the Company Law unless otherwise provided in the foreign investment laws. On March 15, 2019, the National People’s Congress, or the NPC approved the Foreign Investment Law, which became effective on January 1, 2020.
The Company Law has been amended on December 29, 2023 and shall become effective on July 1, 2024. A foreign-invested company is also subject to the Company Law unless otherwise provided in the foreign investment laws. On March 15, 2019, the National People’s Congress, or the NPC approved the Foreign Investment Law, which became effective on January 1, 2020.
Yalla Play Limited in turn became the holding company of two operating subsidiaries established in November 2021, namely Desert HK Limited, or Desert HK, in Hong Kong and YG Technology FZ-LLC, or YG Technology, in the UAE.
Yalla Game Limited holds Yalla Play Limited, which was established under the laws of the British Virgin Islands in September 2021. Yalla Play Limited in turn became the holding company of two operating subsidiaries established in November 2021, namely Desert HK Limited, or Desert HK, in Hong Kong and YG Technology FZ-LLC, or YG Technology, in the UAE.
(11) of 2021 on the Regulation and Protection of Industrial Property Rights Patents, Industrial Drawings, and Designs (“ UAE Industrial Property Law ”), and its Executive Regulations issued by Cabinet of Ministers Resolution No. (6) of 2022 which repealed the former Federal Law No. (17) of 2002.
Industrial property rights: patents, utility models, industrial designs, integrated circuits, and undisclosed information Federal Law No. (11) of 2021 on the Regulation and Protection of Industrial Property Rights Patents, Industrial Drawings, and Designs, or the UAE Industrial Property Law, and its Executive Regulations issued by Cabinet of Ministers Resolution No. (6) of 2022 repealed the former Federal Law No.
In addition, our growing Yalla ecosystem includes YallaChat, an instant message, or IM, product tailored for Arabic users, Waha, a social networking product featuring 3-D avatars, and casual games such as Yalla Baloot and 101 Okey Yalla, developed to sustain vibrant local gaming communities in MENA.
In addition, our growing Yalla ecosystem includes YallaChat, an instant message, or IM, product tailored for Arabic users, WeMuslim, a product that supports Arabic users in observing their customs, and casual games such as Yalla Baloot and 101 Okey Yalla, developed to sustain vibrant local gaming communities in MENA.
For example, if an inventor’s own publication is cited as prior art in the examination of a priority filing, it will have no effect on the novelty requirement for the corresponding UAE patent application provided the publication occurred within 12 months of filing the priority application.
An application submitted within this grace period will still meet the novelty criteria if, for example, an inventor’s own publication is cited as prior art, it will have no effect on the novelty requirement for the corresponding UAE patent application provided the publication occurred within twelve (12) months of filing the application.
Trademark owners may license their rights to third parties, indicating the duration of the license, quality control provisions, exclusivity and any formalities. A trademark owner may also assign his or her trademark to a third party with or without consideration. The transfer must be recorded with the UAE Ministry of Economy as proof of consent to the rights being assigned.
Trademark owners may license their rights to third parties, indicating the duration of the license, quality control provisions, exclusivity and any formalities. A trademark owner may also assign his or her trademark to a third party with or without consideration.
VAT is imposed on the supply of goods and services and on imports of goods and services in the UAE, at the standard rate of 5%, unless the supply or import is subject to the VAT zero rate or exempt from VAT.
VAT is imposed on the supply of goods and services and on imports of goods and services in the UAE, at the standard rate of 5%, unless the supply or import is subject to the VAT zero rate or exempt from VAT. 61 The general rule is that the place of supply of services is in the UAE if the place of residence of the supplier for VAT purposes is in the UAE.
The department of economic development in each emirate within the UAE deals with consumer rights issues and implement plans and procedures related to Consumer Protection Laws. It receives consumer complaints and raises consumers’ awareness about their rights and duties.
The Ministry of Economy deals with consumer rights issues and implement plans and procedures related to Consumer Protection Laws. It receives consumer complaints and raises consumers’ awareness about their rights and duties.
In June 2022, we established Moove HK Limited, another Hong Kong subsidiary held by FYXTECH Group Limited to hold an operating subsidiary in the PRC, Hangzhou Chengyu Technology Co., Ltd., or Hangzhou Chengyu, which was established in August 2022. 37 We also established FYXTECH YALLA LIMITED in the British Virgin Islands in June 2018 to hold an operating subsidiary in the UAE, Yalla Technology FZ-LLC, or Yalla UAE, which was established in July 2018.
In June 2022, we established Moove HK Limited, another Hong Kong subsidiary held by FYXTECH Group Limited to hold an operating subsidiary in the PRC, namely Hangzhou Chengyu Technology Co., Ltd., which was established in August 2022.
Additionally, in the event of employment disputes, the DDA will hear both parties’ positions and, if no resolution is reached, will refer the matter to the relevant Ministry.
Additionally, in the event of employment disputes, the DDA will hear both parties’ positions and, if no resolution is reached, will refer the matter to the UAE Labor Court or the Ministry of Human Resources and Emirratisation (whichever is applicable).

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeChanges in working capital primarily consisted of (i) an increase in deferred revenue of US$7.3 million due to the growth of our business and (ii) an increase in accrued expenses and other current liabilities of US$4.1 million mainly due to an increase in accrued salaries for employees as a result of the increase in the number of employees, which were partially offset by an increase in prepayments and other current assets of US$11.7 million due to an increase in receivables from third-party payment platforms. 77 Investing Activities Net cash used in investing activities was US$62.6 million in 2022, which was primarily attributable to (i) purchases of short-term investments of US$29.6 million, (ii) purchase of term deposits of US$20.0 million and (iii) prepayments of purchase of property and equipment of US$13.4 million, which was partially offset by proceeds from maturity of short-term investments of US$6.4 million.
Biggest changeChanges in working capital primarily consisted of an increase in deferred revenue of US$10.6 million due to the growth of our business, which were partially offset by an increase in prepayments and other current assets of US$6.3 million due to an increase in receivables from third-party payment platforms.
Financing Activities Net cash provided by financing activities was US$0.4 million in 2022, which was primarily attributable to proceeds from exercise of share options of US$2.0 million, which was partially offset by repurchase of shares of US$1.6 million.
Net cash provided by financing activities was US$0.4 million in 2022, which was primarily attributable to proceeds from exercise of share options of US$2.0 million, which was partially offset by repurchase of shares of US$1.6 million.
We benefit from organic user acquisition through word-of-mouth referrals, and we will also continue to focus on cost-effective user acquisition channels to manage selling and marketing expenses. 70 Key Operating Metrics We regularly review a number of operating metrics, including the following key operating metrics, to evaluate our business, measure our performance, identify trends, formulate financial projections and make strategic decisions.
We benefit from organic user acquisition through word-of-mouth referrals, and we will also continue to focus on cost-effective user acquisition channels to manage selling and marketing expenses. Key Operating Metrics We regularly review a number of operating metrics, including the following key operating metrics, to evaluate our business, measure our performance, identify trends, formulate financial projections and make strategic decisions.
British Virgin Islands (“BVI”) Under the current laws of the BVI, the Company’s entity incorporated in the BVI is not subject to tax on income or capital gains. In addition, upon payments of dividends by the entity to their shareholders, no BVI withholding tax will be imposed.
British Virgin Islands Under the current laws of the British Virgin Islands, or the BVI, the Company’s entity incorporated in the BVI is not subject to tax on income or capital gains. In addition, upon payments of dividends by the entity to their shareholders, no BVI withholding tax will be imposed.
Non-GAAP Measures 75 To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States, or GAAP, this annual report presents non-GAAP financial measures, namely non-GAAP operating income and non-GAAP net income, as supplemental measures to review and assess our operating performance.
Non-GAAP Measures To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States, or GAAP, this annual report presents non-GAAP financial measures, namely non-GAAP operating income and non-GAAP net income, as supplemental measures to review and assess our operating performance.
As a result, selling and marketing expenses as a percentage of our total revenues increased from 15.5% in 2021 to 16.4% in 2022. • General and administrative expenses. Our general and administrative expenses decreased by 4.4% from US$38.3 million in 2021 to US$36.6 million in 2022.
As a result, selling and marketing expenses as a percentage of our total revenues increased from 15.5% in 2021 to 16.4% in 2022. 77 • General and administrative expenses. Our general and administrative expenses decreased by 4.4% from US$38.3 million in 2021 to US$36.6 million in 2022.
We believe that our existing cash and cash equivalents and anticipated cash flows from operating activities will be sufficient to meet our anticipated working capital requirements and capital expenditures in the ordinary course of business for the next 12 months.
We believe that our existing cash and cash equivalents and restricted cash and anticipated cash flows from operating activities will be sufficient to meet our anticipated working capital requirements and capital expenditures in the ordinary course of business for the next 12 months.
Our ability to monetize Our results of operations mainly depend on our ability to monetize our user base by converting non-paying users into paying users and keeping them active. Our revenues are primarily affected by the number of paying users.
Our ability to monetize Our results of operations mainly depend on our ability to monetize our user base by converting non-paying users into paying users and keeping them active. Our revenues are primarily affected by the number of paying users and ARPPU.
Such general factors include: • overall political, economic and social environment in MENA; • growth of mobile Internet usage and penetration rate in MENA; 69 • changes in user preferences and mobile-based consumption, as well as our ability to adapt to such changes; • social networking and gaming habits and trends in MENA, including competition among different forms of entertainment; and • growth and competitive landscape of the social networking and gaming industry in MENA.
Such general factors include: • overall political, economic and social environment in MENA; • growth of mobile Internet usage and penetration rate in MENA; • changes in user preferences and mobile-based consumption, as well as our ability to adapt to such changes; 71 • social networking and gaming habits and trends in MENA, including competition among different forms of entertainment; and • growth and competitive landscape of the social networking and gaming industry in MENA.
UAE Under the current laws of the UAE, we are not subject to tax on income or capital gain. Additionally, UAE does not impose a withholding tax on payments of dividends to shareholders. Likely Position under Federal Corporate Tax Regime from 2023 As mentioned in “Item 4. Information on the Company—B.
UAE Under the current laws of the UAE, we are not subject to tax on income or capital gain. Additionally, UAE does not impose a withholding tax on payments of dividends to shareholders. 74 Position under Federal Corporate Tax Regime from 2023 As mentioned in “Item 4. Information on the Company—B.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2022 that are reasonably likely to have a material effect on our total net revenues, income, profitability, liquidity or capital reserves, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions. e.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2023 that are reasonably likely to have a material effect on our total net revenues, income, profitability, liquidity or capital reserves, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions. 81 E.
Singapore The subsidiary incorporated in Singapore is subject to the Singapore Corporate Tax rate of 17% for the year ended December 31, 2022. Results of Operations for Continuing Operations The following table sets forth a summary of our consolidated results of operations for the periods presented, both in absolute amount and as a percentage of our total revenues.
Singapore The subsidiary incorporated in Singapore is subject to the Singapore Corporate Tax rate of 17% for the year ended December 31, 2023. 75 Results of Operations for Continuing Operations The following table sets forth a summary of our consolidated results of operations for the periods presented, both in absolute amount and as a percentage of our total revenues.
We calculate ARPPU in a given period by dividing (i) revenues generated from Yalla, Yalla Ludo, Yalla Parchis (since the third quarter of 2021) and 101 Okey Yalla (since the fourth quarter of 2022) in such period, by (ii) the number of paying users for such period.
We calculate ARPPU in a given period by dividing (i) revenues generated from Yalla, Yalla Ludo, Yalla Parchis, 101 Okey Yalla (since the fourth quarter of 2022) and Ludo Royal (since the third quarter of 2023) in such period, by (ii) the number of paying users for such period.
There is an anti-fragmentation measure where each group will have to nominate only one company in the group to benefit from the progressive rates. PRC Our subsidiaries in China are subject to the PRC Corporate Income Tax Law (“CIT Law”) and are taxed at the statutory income tax rate of 25%, unless otherwise specified.
There is an anti-fragmentation measure where each group will have to nominate only one company in the group to benefit from the progressive rates. PRC Our subsidiaries in China are subject to the PRC Corporate Income Tax Law, or the CIT Law, and are taxed at the statutory income tax rate of 25%, unless otherwise specified.
Yalla and Yalla Ludo have been our main mobile applications for the periods presented herein; Yalla Parchis has been our main mobile application since the third quarter of 2021; and YallaChat and 101 Okey Yalla have been our main mobile applications since the fourth quarter of 2022.
Yalla, Yalla Ludo and Yalla Parchis have been our main mobile applications for the periods presented herein; YallaChat and 101 Okey Yalla have been our main mobile applications since the fourth quarter of 2022; WeMuslim has been our main mobile application since the second quarter of 2023; and Ludo Royal has been our main mobile application since the third quarter of 2023.
Reconciliation of net income to net cash provided by operating activities primarily consisted of the non-cash share-based compensation expenses of US$26.7 million.
Reconciliation of net income to net cash provided by operating activities primarily consisted of the non-cash share-based compensation expenses of US$17.9 million.
Furthermore, the non-GAAP financial measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited. We compensate for these limitations by providing the relevant disclosure of our non-GAAP financial measures in the reconciliations to the nearest U.S. GAAP performance measures, all of which should be considered when evaluating our performance.
Furthermore, the non-GAAP financial measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited. 78 We compensate for these limitations by providing the relevant disclosure of our non-GAAP financial measures in the reconciliations to the nearest U.S.
Net cash used in investing activities was US$5.4 million in 2021, which was primarily attributable to (i) purchases of short-term investments of US$21.0 million, (ii) payments of long-term investments of US$1.8 million and (iii) purchase of property and equipment of US$1.5 million, which was partially offset by proceeds from maturity of short-term investments of US$18.9 million.
Net cash used in investing activities was US$62.6 million in 2022, which was primarily attributable to (i) purchases of short-term investments of US$29.6 million, (ii) purchase of term deposits of US$20.0 million and (iii) prepayments of purchase of property and equipment of US$13.4 million, which was partially offset by proceeds from maturity of short-term investments of US$6.4 million. 80 Net cash used in investing activities was US$5.4 million in 2021, which was primarily attributable to (i) purchases of short-term investments of US$21.0 million, (ii) payments of long-term investments of US$1.8 million and (iii) purchase of property and equipment of US$1.5 million, which was partially offset by proceeds from maturity of short-term investments of US$18.9 million.
Our revenues increased by 102.4% from US$134.9 million in 2020 to US$273.1 million in 2021 and further increased by 11.2% to US$303.6 million in 2022. Our innovative business model focuses on users’ interactions and social networking experience on our platform.
Our revenues increased by 11.2% from US$273.1 million in 2021 to US$303.6 million in 2022 and further increased by 5.0% to US$318.9 million in 2023. Our innovative business model focuses on users’ interactions and social networking experience on our platform.
We have built a large and vibrant Yalla community. In the fourth quarter of 2022, approximately 32.0 million users visited our platform on average each month, and the number of paying users on our platform reached 12.5 million during the same period. We have experienced continued revenue growth in recent years.
We have built a large and vibrant Yalla community. In the fourth quarter of 2023, approximately 36.2 million users visited our platform on average each month, and the number of paying users on our platform reached 11.9 million during the same period. We have experienced continued revenue growth in recent years.
As a result, Yalla Group Limited’s ability to pay dividends depends upon dividends paid by our UAE subsidiaries. As a matter of the laws regulating the subsidiaries in the UAE, the subsidiaries can pay dividends only to the extent they have profits available for the purpose after deducting the statutory reserve required by the local laws.
As a matter of the laws regulating the subsidiaries in the UAE, the subsidiaries can pay dividends only to the extent they have profits available for the purpose after deducting the statutory reserve required by the local laws.
The following table reconciles our non-GAAP operating income in the years presented to operating income: For the Year Ended December 31, 2020 2021 2022 (US$ in thousands) Operating income 3,759 83,028 78,698 Add: share-based compensation expenses 60,805 43,939 26,691 Non-GAAP operating income 64,564 126,967 105,389 The following table reconciles our non-GAAP net income in the years presented to net income: For the Year Ended December 31, 2020 2021 2022 (US$ in thousands) Net income 3,213 82,594 79,038 Add: share-based compensation expenses, net of tax effect of nil* 60,805 43,939 26,691 Non-GAAP net income 64,018 126,533 105,729 * Share-based compensation expenses were recorded at the Company (incorporated in the Cayman Islands), and its subsidiaries incorporated in PRC and UAE.
The following table reconciles our non-GAAP operating income in the years presented to operating income: For the Year Ended December 31, 2021 2022 2023 (US$ in thousands) Operating income 83,028 78,698 96,354 Add: share-based compensation expenses 43,939 26,691 17,930 Non-GAAP operating income 126,967 105,389 114,284 The following table reconciles our non-GAAP net income in the years presented to net income: For the Year Ended December 31, 2021 2022 2023 (US$ in thousands) Net income 82,594 79,038 113,058 Add: share-based compensation expenses, net of tax effect of nil* 43,939 26,691 17,930 Non-GAAP net income 126,533 105,729 130,988 * Share-based compensation expenses were recorded at the Company (incorporated in the Cayman Islands), and its subsidiaries incorporated in PRC and UAE.
Net cash used in financing activities was US$24.6 million in 2021, which was primarily attributable to repurchase of shares of US$25.4 million, which was partially offset by proceeds from exercise of share options of US$1.1 million.
Net cash used in financing activities was US$24.6 million in 2021, which was primarily attributable to repurchase of shares of US$25.4 million, which was partially offset by proceeds from exercise of share options of US$1.1 million. Capital Expenditures We made capital expenditures of US$1.5 million, US$16.3 million and US$1.6 million in 2021, 2022 and 2023, respectively.
For the Year Ended December 31, 2020 2021 2022 US$ % US$ % US$ % (in thousands, except for percentages) Revenues 134,927 100.0 273,135 100.0 303,604 100.0 Costs and expenses Cost of revenues (61,271 ) (45.4 ) (95,145 ) (34.9 ) (113,808 ) (37.6 ) Selling and marketing expenses (21,702 ) (16.1 ) (42,405 ) (15.5 ) (49,940 ) (16.4 ) General and administrative expenses (42,974 ) (31.8 ) (38,271 ) (14.0 ) (36,583 ) (12.0 ) Technology and product development expenses (5,221 ) (3.9 ) (14,286 ) (5.2 ) (24,575 ) (8.1 ) Total costs and expenses (131,168 ) (97.2 ) (190,107 ) (69.6 ) (224,906 ) (74.1 ) Operating income 3,759 2.8 83,028 30.4 78,698 25.9 Interest income 202 0.1 112 0.1 3,301 1.1 Government grants 99 0.1 1,420 0.5 322 0.1 Investment income 14 0.0 54 0.0 21 0.0 Impairment loss — 0.0 — 0.0 (705 ) (0.2 ) Income before income taxes 4,074 3.0 84,614 31.0 81,637 26.9 Income tax expense (861 ) (0.6 ) (2,020 ) (0.8 ) (2,599 ) (0.9 ) Net income 3,213 2.4 82,594 30.2 79,038 26.0 73 Comparison of Year Ended December 31, 2022 and Year Ended December 31, 2021 Revenues.
For the Year Ended December 31, 2021 2022 2023 US$ % US$ % US$ % (in thousands, except for percentages) Revenues 273,135 100.0 303,604 100.0 318,878 100.0 Costs and expenses Cost of revenues (95,145 ) (34.9 ) (113,808 ) (37.6 ) (114,527 ) (36.0 ) Selling and marketing expenses (42,405 ) (15.5 ) (49,940 ) (16.4 ) (45,383 ) (14.2 ) General and administrative expenses (38,271 ) (14.0 ) (36,583 ) (12.0 ) (36,808 ) (11.5 ) Technology and product development expenses (14,286 ) (5.2 ) (24,575 ) (8.1 ) (25,805 ) (8.1 ) Total costs and expenses (190,107 ) (69.6 ) (224,906 ) (74.1 ) (222,523 ) (69.8 ) Operating income 83,028 30.4 78,698 25.9 96,355 30.2 Interest income 112 0.1 3,301 1.1 19,833 6.2 Government grants 1,420 0.5 322 0.1 337 0.1 Investment income 54 0.0 21 0.0 1,728 0.6 Impairment loss of investments — 0.0 (705 ) (0.2 ) (2,509 ) (0.8 ) Income before income taxes 84,614 31.0 81,637 26.9 115,744 36.3 Income tax expense (2,020 ) (0.8 ) (2,599 ) (0.9 ) (2,686 ) (0.8 ) Net income 82,594 30.2 79,038 26.0 113,058 35.5 Comparison of Year Ended December 31, 2023 and Year Ended December 31, 2022 Revenues.
Our average MAUs increased by 71.0% from 16.4 million in the three months ended December 31, 2020 to 28.1 million in the three months ended December 31, 2021, and further increased by 14.0% to 32.0 million in the three months ended December 31, 2022.
Our average MAUs increased by 14.0% from 28.1 million in the three months ended December 31, 2021 to 32.0 million in the three months ended December 31, 2022, and further increased by 13.3% to 36.2 million in the three months ended December 31, 2023.
As a result of the foregoing, our net income decreased by 4.3% from US$82.6 million in 2021 to US$79.0 million in 2022. 74 Comparison of Year Ended December 31, 2021 and Year Ended December 31, 2020 Revenues.
As a result of the foregoing, our net income decreased by 4.3% from US$82.6 million in 2021 to US$79.0 million in 2022.
Our investment income decreased by 61.0% from US$55 thousand in 2021 to US$21 thousand in 2022, primarily due to a decrease in return rates that were applicable to our wealth management products in 2022. Impairment loss. US$705 thousand of impairment loss was recognized in 2022 as the amount of carrying value exceeds the estimated fair value of long-term investments.
Our investment income decreased by 61.0% from US$55 thousand in 2021 to US$21 thousand in 2022, primarily due to a decrease in return rates that were applicable to our wealth management products in 2022. Impairment loss of investments.
The following table sets forth our average MAUs, paying users and ARPPU: Three Months Ended March 31, 2021 June 30, 2021 September 30, 2021 December 31, 2021 March 31, 2022 June 30, 2022 September 30, 2022 December 31, 2022 Average MAUs (in thousands) 18,990 22,589 25,946 28,060 29,203 29,920 30,896 31,987 Paying users (in thousands) 5,877 6,580 7,677 8,429 9,402 10,585 11,541 12,457 ARPPU(1) (US$) 11.5 10.1 9.3 8.0 7.7 7.2 6.9 6.0 (1) When calculating the ARPPU, we include revenues generated from Yalla, Yalla Ludo, Yalla Parchis (since the third quarter of 2021) and 101 Okey Yalla (since the fourth quarter of 2022) in a given period.
The following table sets forth our average MAUs, paying users and ARPPU: Three Months Ended March 31, 2022 June 30, 2022 September 30, 2022 December 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 Average MAUs (in thousands) 29,203 29,920 30,896 31,987 32,973 34,192 35,096 36,237 Paying users (in thousands) 9,402 10,585 11,541 12,457 13,514 13,402 11,236 11,930 ARPPU (1) (US$) 7.7 7.2 6.9 6.0 5.4 5.8 7.4 6.6 (1) When calculating the ARPPU, we include revenues generated from Yalla, Yalla Ludo, Yalla Parchis, 101 Okey Yalla (since the fourth quarter of 2022) and Ludo Royal (since the third quarter of 2023) in a given period.
There will be no withholding tax in the UAE on the payment of dividends to residents or non-residents. 72 Hong Kong Under the current Hong Kong Inland Revenue Ordinance, our subsidiaries incorporated in Hong Kong are subject to Hong Kong profits tax at the rate of 16.5% on their taxable income generated from the operations in Hong Kong.
Hong Kong Under the current Hong Kong Inland Revenue Ordinance, our subsidiaries incorporated in Hong Kong are subject to Hong Kong profits tax at the rate of 16.5% on their taxable income generated from the operations in Hong Kong. Payments of dividends by the Hong Kong subsidiaries to us are not subject to withholding tax in Hong Kong.
The following table sets forth a summary of our cash flows for the periods indicated: For the Year Ended December 31, 2020 2021 2022 (US$ in thousands) Net cash provided by operating activities 64,793 144,241 119,548 Net cash provided by (used in) investing activities 2,482 (5,359 ) (62,566 ) Net cash provided by (used in) financing activities 123,768 (24,561 ) 371 Effect of foreign currency exchange rate changes on cash and cash equivalents 537 282 (1,582 ) Net increase in cash and cash equivalents 191,580 114,603 55,771 Cash and cash equivalents at the beginning of the year 45,303 236,883 351,486 Cash and cash equivalents at the end of the year 236,883 351,486 407,257 Operating Activities Net cash provided by operating activities was US$119.5 million in 2022, primarily due to net income of US$79.0 million, adjusted for the effects of changes in working capital and other activities.
We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. 79 The following table sets forth a summary of our cash flows for the periods indicated: For the Year Ended December 31, 2021 2022 2023 (US$ in thousands) Net cash provided by operating activities 144,241 119,548 139,320 Net cash used in investing activities (5,359 ) (62,566 ) (226,125 ) Net cash (used in) provided by financing activities (24,561 ) 371 (7,554 ) Effect of foreign currency exchange rate changes on cash and cash equivalents and restricted cash 282 (1,582 ) (591 ) Net increase in cash and cash equivalents and restricted cash 114,603 55,771 (94,950 ) Cash and cash equivalents at the beginning of the year 236,883 351,486 407,257 Cash and cash equivalents and restricted cash at the end of the year 351,486 407,257 312,307 Operating Activities Net cash provided by operating activities was US$139.3 million in 2023, primarily due to net income of US$113.1 million, adjusted for the effects of changes in working capital and other activities.
A company’s profits available for distribution are its accumulated, realized profits, so far as not previously utilized by distribution or capitalization, less its accumulated, realized losses, so far as not previously written off in a reduction or reorganization of capital duly made.
A company’s profits available for distribution are its accumulated, realized profits, so far as not previously utilized by distribution or capitalization, less its accumulated, realized losses, so far as not previously written off in a reduction or reorganization of capital duly made. Recent Accounting Pronouncements Please see Note 2 to our consolidated financial statements included elsewhere in this annual report.
Liquidity and Capital Resources Our primary sources of liquidity have been issuance of equity securities and cash provided by operating activities, which have historically been sufficient to meet our working capital and capital expenditure requirements.
Liquidity and Capital Resources Our primary sources of liquidity have been issuance of equity securities and cash provided by operating activities, which have historically been sufficient to meet our working capital and capital expenditure requirements. In 2021, 2022 and 2023, net cash provided by operating activities was US$144.2 million, US$119.5 million and US$139.3 million, respectively.
We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.
GAAP performance measures, all of which should be considered when evaluating our performance. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.
Net cash provided by investing activities was US$2.5 million in 2020, which was primarily attributable to (i) proceeds from maturity of short-term investments of US$4.5 million and (ii) proceeds from maturity of term deposits of US$2.7 million, which was partially offset by (i) purchases of short-term investments of US$3.7 million and (ii) purchase of property and equipment of US$1.0 million.
Investing Activities Net cash used in investing activities was US$226.1 million in 2023, which was primarily attributable to (i) purchases of term deposits of US$292.0 million, (ii) purchases of short-term investments of US$100.6 million, and (iii) payments of long-term investments of US$50.1 million, which was partially offset by (i) proceeds from maturity of short-term investments of US$117.7 million and (ii) proceeds from maturity of term deposits of US$100.5 million.
We have experienced significant growth in the number of paying users from 5.2 million in the three months ended December 31, 2020 to 8.4 million in the three months ended December 31, 2021, and to 12.5 million in the three months ended December 31, 2022.
We have experienced significant growth in the number of paying users from 8.4 million in the three months ended December 31, 2021 to 12.5 million in the three months ended December 31, 2022, primarily due to the expansion of our user base, the superior user experience we offer, and diversification of transaction scenarios on our platform.
Income tax expense. Our income tax expense increased by 28.7% from US$2.0 million in 2021 to US$2.6 million in 2022, due to an increase in our taxable income. Net income .
Our income tax expense increased from US$2.6 million in 2022 to US$2.7 million in 2023, due to an increase in our taxable income. Net income . As a result of the foregoing, our net income increased by 43.0% from US$79.0 million in 2022 to US$113.1 million in 2023.
As a result of these reasons, cost of revenues as a percentage of our total revenues decreased from 45.4% in 2020 to 34.9% in 2021. • Selling and marketing expenses.
Cost of revenues as a percentage of our total revenues decreased from 37.5% in 2022 to 35.9% in 2023. • Selling and marketing expenses.
Holding Company Structure Yalla Group Limited is a holding company with no material operations of its own. We conduct our operations primarily through our subsidiaries in the UAE and China, and all of users’ payments for virtual currencies are mainly collected by our subsidiaries in the UAE.
We conduct our operations primarily through our subsidiaries in the UAE and China, and all of users’ payments for virtual currencies are mainly collected by our subsidiaries in the UAE. As a result, Yalla Group Limited’s ability to pay dividends depends upon dividends paid by our UAE subsidiaries.
As a result of these reasons, our general and administrative expenses also decreased as a percentage of our total revenues from 31.8% in 2020 to 14.0% in 2021. • Technology and product development expenses.
General and administrative expenses as a percentage of our total revenues decreased from 12.0% in 2022 to 11.5% in 2023. 76 • Technology and product development expenses.
Our technology and product development expenses increased by 173.6% from US$5.2 million in 2020 to US$14.3 million in 2021, due to an increase in salaries and benefits for our technology and product development staff by US$8.1 million from 2020 to 2021.
Our technology and product development expenses increased by 5.0% from US$24.6 million in 2022 to US$25.8 million in 2023, due to an increase in salaries and benefits for our technology and product development staff by US$1.4 million from 2022 to 2023, driven by an increase in the headcount of our technology and product development staff to support the development of new businesses and expansion of our product portfolio.
Our ability to manage our costs and expenses Due to our innovative business model, we have enjoyed strong unit economics and return for our shareholders. As our platform promotes users’ interactions, we do not incur significant content acquisition cost, such as incentive fees to key users or costs for acquiring media content.
As our platform promotes users’ interactions, we do not incur significant content acquisition cost, such as incentive fees to key users or costs for acquiring media content. Our profitability will depend on our ability to continually improve cost efficiency. Selling and marketing expenses represent a significant component of our costs and expenses.
Net cash provided by operating activities was US$64.8 million in 2020, primarily due to net income of US$3.2 million, adjusted for the effects of reconciling net income to net cash provided by operating activities and changes in working capital.
Net cash provided by operating activities was US$119.5 million in 2022, primarily due to net income of US$79.0 million, adjusted for the effects of changes in working capital and other activities. Reconciliation of net income to net cash provided by operating activities primarily consisted of the non-cash share-based compensation expenses of US$26.7 million.
Recent Accounting Pronouncements Please see Note 2 to our consolidated financial statements included elsewhere in this annual report. c. Research and Development, Patents and Licenses, Etc. We have focused on and will continue to invest in our technology system, which supports all key aspects of our platform and is designed to optimize for scalability and flexibility.
C. Research and Development, Patents and Licenses, Etc. We have focused on and will continue to invest in our technology system, which supports all key aspects of our platform and is designed to optimize for scalability and flexibility. Our technology and product development expenses were US$14.3 million, US$24.6 million and US$25.8 million in 2021, 2022 and 2023, respectively. D.
We will also continue to introduce new virtual items and upgrade services on our platform. We believe our massive and highly engaged user base and our leading position in the social networking and gaming industry in MENA will allow us to continue to strengthen our monetization capabilities.
We believe our massive and highly engaged user base and our leading position in the social networking and gaming industry in MENA will allow us to continue to strengthen our monetization capabilities. 72 Our ability to manage our costs and expenses Due to our innovative business model, we have enjoyed strong unit economics and return for our shareholders.
The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.
The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations.
Capital Expenditures We made capital expenditures of US$1.0 million, US$1.5 million and US$16.3 million in 2020, 2021 and 2022, respectively. Our capital expenditures were mainly used for purchases and prepayments of property and equipment and purchases of intangible asset. We will continue to make capital expenditures to meet the expected growth of our business.
Our capital expenditures were mainly used for purchases and prepayments of property and equipment and purchases of intangible asset. We will continue to make capital expenditures to meet the expected growth of our business. Holding Company Structure Yalla Group Limited is a holding company with no material operations of its own.
Our cost of revenues increased by 55.3% from US$61.3 million in 2020 to US$95.1 million in 2021, due to an increase in commission fees paid to third-party payment platforms by US$33.9 million from 2020 to 2021, partially offset by a decrease in share-based compensation expenses by US$10.0 million from 2020 to 2021.
Our cost of revenues slightly increased by 0.6% from US$113.8 million in 2022 to US$114.5 million in 2023, mainly due to an increase in incentive compensation, salaries and other benefits by US$5.3 million from 2022 to 2023, partially offset by a decrease in commission fees paid to third-party payment platforms by US$4.2 million from 2022 to 2023 as a result of diversified payment channels.
We experienced a decrease in our ARPPU in 2022 mainly due to rapid expansion of Yalla community and the significant increase in our paying users in 2022. 71 Key Components of Our Results of Operations Revenues We primarily generate our revenues by providing group chatting and games services.
Our ARPPU increased from US$6.0 in the fourth quarter of 2022 to US$6.6 in the same period of 2023 mainly because our enhanced gamification features derive users to spend more on our platform. Key Components of Our Results of Operations Revenues We primarily generate our revenues by providing group chatting and games services.
In 2020, 2021 and 2022, net cash provided by operating activities was US$64.8 million, US$144.2 million and US$119.5 million, respectively. 76 As of December 31, 2022, we had cash and cash equivalents of US$407.3 million, as compared to cash and cash equivalents of US$351.5 million as of December 31, 2021.
As of December 31, 2023, we had cash and cash equivalents and restricted cash of US$312.3 million, as compared to cash and cash equivalents of US$407.3 million as of December 31, 2022.
Such growth was primarily due to the expansion of our user base, the superior user experience we offer, and diversification of transaction scenarios on our platform. We incentivize user spending by recognizing their generosity in the Yalla community. We have created rankings to honor users who have sent the most gifts.
Our solid revenue growth was partially attributable to the increase in ARPPU, which increased from US$6.0 in the three months ended December 31, 2022 to US$6.6 in the same period of 2023. We incentivize user spending by recognizing their generosity in the Yalla community. We have created rankings to honor users who have sent the most gifts.
As a result, technology and product development expenses also increased as a percentage of our total revenues from 3.9% in 2020 to 5.2% in 2021. Interest income. Our interest income decreased by 44.7% from US$202 thousand in 2020 to US$112 thousand in 2021, primarily due to a decrease in interest rates that were applicable to our bank deposits. Government grants.
Technology and product development expenses as a percentage of our total revenues remained stable at 8.1% in both 2022 and 2023. Interest income. Our interest income increased significantly from US$3.3 million in 2022 to US$19.8 million in 2023, primarily due to an increase in interest rates applicable to our bank deposits and a continued increase in our cash position.
Non-Arabic speaking users are generally located in our new geographic markets. Costs and expenses . Our total costs and expenses increased by 44.9% from US$131.2 million in 2020 to US$190.1 million in 2021. • Cost of revenues.
Our total costs and expenses decreased by 1.1% from US$224.9 million in 2022 to US$222.5 million in 2023. • Cost of revenues.
Our investment income increased by 291.8% from US$14 thousand in 2020 to US$55 thousand in 2021, primarily due to increased purchase of wealth management products in 2021. Income tax expense. Our income tax expense increased by 134.6% from US$861 thousand in 2020 to US$2.0 million in 2021, due to an increase in our taxable income. Net income .
US$705 thousand of impairment loss of investments was recognized in 2022 as the amount of carrying value exceeds the estimated fair value of long-term investments. Income tax expense. Our income tax expense increased by 28.7% from US$2.0 million in 2021 to US$2.6 million in 2022, due to an increase in our taxable income. Net income .
Net cash provided by financing activities was US$123.8 million in 2020, which was attributable to proceeds from initial public offering of US$135.1 million, net of underwriting commissions and discounts, which was partially offset by (i) payments of dividends of US$9.0 million and (ii) payments of initial public offering costs of US$2.3 million.
Financing Activities Net cash used in financing activities was US$7.6 million in 2023, which was primarily attributable to repurchase of shares of US$8.5 million, which was partially offset by proceeds from exercise of share options of US$0.9 million.
Average MAUs have grown significantly, primarily due to our interactive community culture and large user base that have led to a strong word-of-mouth effect as well as our online marketing efforts. Paying Users Paying users allow us to evaluate the monetization capabilities of our platform.
Average MAUs have grown significantly, primarily due to the introduction of two main mobile applications into our product portfolio in 2023, and the improvement of our game mechanism aimed at boosting user engagement and providing better user experiences. Paying Users Paying users allow us to evaluate the monetization capabilities of our platform.
Our total revenues increased by 102.4% from US$134.9 million in 2020 to US$273.1 million in 2021, which was driven by an increase of paying users, which grew from 5.2 million in the three months ended December 31, 2020 to 8.4 million in the three months ended December 31, 2021.
Despite a slight decrease in the number of paying users from 12.5 million in the three months ended December 31, 2022 to 11.9 million in the three months ended December 31, 2023, primarily driven by a near-term game mechanism adjustment, our revenues continued to grow rapidly from US$75.1 million in the three months ended December 31, 2022 to US$80.9 million in the same period of 2023.
Removed
Our profitability will depend on our ability to continually improve cost efficiency. Selling and marketing expenses represent a significant component of our costs and expenses.
Added
We will also continue to introduce new virtual items and upgrade services on our platform.
Removed
We have experienced rapid growth in paying users in 2022. The number of paying users grew from 8.4 million for the fourth quarter of 2021 to 12.5 million for the fourth quarter of 2022. Such growths were primarily due to optimization of user experience through localized product design and interactive features and the expansion of user community.
Added
Primarily due to a near-term game mechanism adjustment, the number of paying users slightly decreased by 4.2% from 12.5 million for the fourth quarter of 2022 to 11.9 million for the fourth quarter of 2023, but our revenues increased significantly by 7.7% during this period. 73 ARPPU ARPPU is a measure we adopted to better understand user behaviors and evaluate our monetization strategies.
Removed
ARPPU ARPPU is a measure we adopted to better understand user behaviors and evaluate our monetization strategies.
Added
Business Overview—Regulation—United Arab Emirates—Regulations Relating to Tax—Corporate income tax” above, the UAE has issued the CT Law, pursuant to which, federal corporate tax applies to financial periods starting on or after June 1, 2023.
Removed
Business Overview—Regulation—United Arab Emirates—Regulations Relating to Tax—Corporate income tax” above, the UAE Ministry of Finance has announced that a corporate tax will be introduced from 2023. We have summarised below the position based on this announcement. In terms of resident companies, an exemption will be available for dividends and capital gains derived from qualifying shareholding.
Added
Although natural persons that conduct a business in the UAE are subject to corporate tax, personal investment income, as defined in the UAE tax legislation, derived by individuals is not taxable.
Removed
It is not clear at this stage what will constitute a “qualifying shareholding” but there is likely to be at least a requirement to hold a minimum percentage and for a minimum period.
Added
Therefore, individuals purchasing shares for their personal accounts (and without possessing or requiring a license to do so) should not be taxable on dividends or capital gains accrued from the shares.
Removed
Payments of dividends by the Hong Kong subsidiaries to us are not subject to withholding tax in Hong Kong.
Added
In the context of corporate/juridical person shareholders that are subject to UAE corporate tax, dividends and profit distributions earned from (i.e., issued by or in respect of) entities resident in the UAE are automatically exempt income for corporate tax purposes.
Removed
The growth in paying users was due to the superior user experience we offer, diversification of transaction scenarios on our platform and our expansion into new geographic markets. As a percentage of our total revenues, revenues derived from non-Arabic versions of our mobile applications increased from 8.5% in 2020 to 11.8% in 2021.
Added
For completeness, profit distributions/dividends generated from (i.e., issued by or in respect of) foreign non-UAE resident entities may be subject to a participation exemption, depending on the satisfaction of strict conditions.
Removed
Our selling and marketing expenses increased by 95.4% from US$21.7 million in 2020 to US$42.4 million in 2021, due to an increase in advertising and market promotion expenses by US$14.3 million from 2020 to 2021 as a result of our continued user acquisition efforts and expanding product portfolio.
Added
Capital gains generated from the disposal of ownership interests held in UAE-resident or foreign non-UAE resident entities may be subject to a participation exemption, depending on the satisfaction of strict conditions. The participation exemption conditions include but are not limited to, minimum ownership interest thresholds and minimum holding periods (or intended minimum holding periods), among other stringent conditions.
Removed
Selling and marketing expenses as a percentage of our total revenues decreased from 16.1% in 2020 to 15.5% in 2021, due to a decrease in share-based compensation expenses as a percentage of our total revenues from 5.7% in 2020 to 3.7% in 2021, partially offset by higher spending on marketing activities related to new products. • General and administrative expenses.
Added
Our total revenues increased by 5.0% from US$303.6 million in 2022 to US$318.9 million in 2023, which was primarily driven by robust revenue growth from games services, which increased by 20.5% from US$88.6 million in 2022 to US$106.7 million in 2023. Costs and expenses .
Removed
Our general and administrative expenses decreased by 10.9% from US$43.0 million in 2020 to US$38.3 million in 2021. The decrease was due to a decrease in share-based compensation expenses by US$9.1 million from 2020 to 2021, partially offset by an increase in salaries and other benefits for our general and administrative staff by US$3.4 million from 2020 to 2021.
Added
Our selling and marketing expenses decreased by 9.1% from US$49.9 million in 2022 to US$45.4 million in 2023, due to a decrease in advertising and market promotion expenses by US$4.2 million from 2022 to 2023 driven by a more disciplined advertising and promotion approach.
Removed
Our government grants increased by 1,330.2% from US$99 thousand in 2020 to US$1.4 million in 2021, due to an increase in government grants of US$1.3 million related to cash subsidies received from local governments for operating a business in their jurisdictions in 2021. Investment income.
Added
As a result, selling and marketing expenses as a percentage of our total revenues decreased from 16.4% in 2022 to 14.2% in 2023. • General and administrative expenses. Our general and administrative expenses remained relatively stable at US$36.8 million in 2023, compared with US$36.6 million in 2022.
Removed
As a result of the foregoing, our net income increased by 2,470.3% from US$3.2 million in 2020 to US$82.6 million in 2021.
Added
Government grants. Our government grants remained relatively stable at US$0.3 million in 2022 and 2023. Investment income. Our investment income increased significantly from US$21 thousand in 2022 to US$1.7 million in 2023, primarily due to increased purchase of wealth management products and increased return rates applicable to our wealth management products in 2023. Impairment loss of investments.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeHe is the founder and chief executive officer of Seattle Project Management Services, a service provider that embraces new technology trends by investing in and partnering with leading technology companies. He had also held leading positions in Etisalat Group, a multinational Emirati-based telecommunications services provider, as chief executive officer of Etisalat Egypt, and chief executive officer of Etisalat Afghanistan.
Biggest changeHe had also held leading positions in Etisalat Group, a multinational Emirati-based telecommunications services provider, as chief executive officer of Etisalat Egypt, and chief executive officer of Etisalat Afghanistan. He was one of the early founders of Thuraya Satellite Telecommunications in 1997 and served in Thuraya in many roles, including chief commercial officer. Mr.
The functions and powers of our board of directors include, among others: • conducting and managing the business of our company; • representing our company in contracts and deals; • appointing attorneys for our company; • select senior management such as managing directors and executive directors; • providing employee benefits and pension; • managing our company’s finance and bank accounts; • exercising the borrowing powers of our company and mortgaging the property of our company; and • exercising any other powers conferred by the shareholders meetings or under our memorandum and articles of association, as amended and restated from time to time. 85 Terms of Directors and Executive Officers Our directors may be elected by a resolution of our board of directors, or by an ordinary resolution of our shareholders, pursuant to our third amended and restated memorandum and articles of association.
The functions and powers of our board of directors include, among others: • conducting and managing the business of our company; • representing our company in contracts and deals; • appointing attorneys for our company; • select senior management such as managing directors and executive directors; • providing employee benefits and pension; • managing our company’s finance and bank accounts; • exercising the borrowing powers of our company and mortgaging the property of our company; and • exercising any other powers conferred by the shareholders meetings or under our memorandum and articles of association, as amended and restated from time to time. 87 Terms of Directors and Executive Officers Our directors may be elected by a resolution of our board of directors, or by an ordinary resolution of our shareholders, pursuant to our third amended and restated memorandum and articles of association.
The nominating and corporate governance committee is responsible for, among other things: • selecting and recommending to the board nominees for election by the shareholders or appointment by the board; • reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity; • making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and • advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken. 87 D.
The nominating and corporate governance committee is responsible for, among other things: • selecting and recommending to the board nominees for election by the shareholders or appointment by the board; • reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity; • making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and • advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken. 89 D.
GAAP that have been discussed with management and all other material written communications between the independent auditor and management; 86 • establishing procedures for the receipt, retention and treatment of complaints received from our employees regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; • annually reviewing and reassessing the adequacy of our audit committee charter; • such other matters that are specifically delegated to our audit committee by our board of directors from time to time; • meeting separately, periodically, with management, internal auditors and the independent auditor; and • reporting regularly to the full board of directors.
GAAP that have been discussed with management and all other material written communications between the independent auditor and management; 88 • establishing procedures for the receipt, retention and treatment of complaints received from our employees regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; • annually reviewing and reassessing the adequacy of our audit committee charter; • such other matters that are specifically delegated to our audit committee by our board of directors from time to time; • meeting separately, periodically, with management, internal auditors and the independent auditor; and • reporting regularly to the full board of directors.
Xu worked at Beijing Feinno Communication Technology Co., Ltd., where he focused on business development and marketing in MENA. Mr. Xu holds a bachelor’s degree in computer science from University of Wollongong in Australia. 80 David Cui has served as one of our independent directors since September 2020. Mr.
Xu worked at Beijing Feinno Communication Technology Co., Ltd., where he focused on business development and marketing in MENA. Mr. Xu holds a bachelor’s degree in computer science from University of Wollongong in Australia. 82 David Cui has served as one of our independent directors since September 2020. Mr.
Such share incentive plan is referred to as the 2018 Plan in this annual report. 41,733,506 ordinary shares have been reserved for issuance in connection with the 2018 Plan. 82 Administration The 2018 Plan is administered by (i) the compensation committee, (ii) such other committee of the board to which the board delegates the power to administer the 2018 Plan or (iii) the board.
Such share incentive plan is referred to as the 2018 Plan in this annual report. 41,733,506 ordinary shares have been reserved for issuance in connection with the 2018 Plan. 84 Administration The 2018 Plan is administered by (i) the compensation committee, (ii) such other committee of the board to which the board delegates the power to administer the 2018 Plan or (iii) the board.
Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. *** The business address for our directors and executive officers is #238, Building 16, Dubai Internet City, Dubai, United Arab Emirates.
Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. *** The business address for our directors and executive officers is #234, Building 16, Dubai Internet City, Dubai, United Arab Emirates.
The table below summarizes, as of December 31, 2022, the options we have granted to our directors and executive officers under the 2018 Plan.
The table below summarizes, as of December 31, 2023, the options we have granted to our directors and executive officers under the 2018 Plan.
Name Position Ordinary Shares Underlying Options Awarded Option Exercise Price (US$) Grant Date Option Expiration Date Saifi Ismail Director and President * 0.68 September 1, 2021 September 1, 2031 Yang Hu Chief Financial Officer * 0.22 November 9, 2022 November 9, 2032 * Less than 1% of our outstanding shares.
Name Position Ordinary Shares Underlying Options Awarded Option Exercise Price (US$) Grant Date Option Expiration Date Saifi Ismail Director and President * 0.68 September 1, 2021 September 1, 2031 * 0.22 August 15, 2023 August 15, 2033 Yang Hu Chief Financial Officer * 0.22 November 9, 2022 November 9, 2032 * Less than 1% of our outstanding shares.
Employees We had 374, 629 and 829 employees as of December 31, 2020, 2021 and 2022, respectively. The increase in our employees in 2022 was mainly related to employees for platform maintenance and product development function, which was in line with our efforts in launching more new products during the same period.
Employees We had 629, 829 and 778 employees as of December 31, 2021, 2022 and 2023, respectively. The increase in our employees in 2023 was mainly related to employees for platform maintenance and product development function, which was in line with our efforts in launching more new products during the same period.
Lei Liu, the spouse of Mr. Tao Yang. (2) Represents (i) 7,366,326 Class A ordinary shares held by WindBell Limited, (ii) 200,000 Class A ordinary shares held by Mr. Xu, and (iii) 1,720,000 Class A ordinary shares that Mr. Xu has the right to receive upon the exercise of share options within 60 days after March 31, 2023.
Lei Liu, the spouse of Mr. Tao Yang. (2) Represents (i) 7,366,326 Class A ordinary shares held by WindBell Limited, (ii) 200,000 Class A ordinary shares held by Mr. Xu, and (iii) 2,770,000 Class A ordinary shares that Mr. Xu has the right to receive upon the exercise of share options within 60 days after March 31, 2024.
Our employees are based across Dubai, Hangzhou, Shenzhen and Hong Kong. The following table sets forth the number of our employees by function as of December 31, 2022.
Our employees are based across Dubai, Hangzhou, Shenzhen, Guangzhou and Hong Kong. The following table sets forth the number of our employees by function as of December 31, 2023.
Information regarding beneficial ownership is reported as of December 31, 2022, based on the information contained in the Schedule 13G/A filed by JOLLY UNIQUE LIMITED and its affiliates on February 8, 2023. (5) Represents 9,090,909 Class A ordinary shares held by SIG Global China Fund I, LLLP.
Information regarding beneficial ownership is reported as of December 31, 2023, based on the information contained in the Schedule 13G/A filed by JOLLY UNIQUE LIMITED and its affiliates on January 25, 2024. (5) Represents 9,090,909 Class A ordinary shares held by SIG Global China Fund I, LLLP.
(1) Represents (i) 33,120,000 Class A ordinary shares and 24,734,013 Class B ordinary shares held by YooYoo Limited, (ii) 445,505 Class A ordinary shares held by Allies Partners Limited and (iii) 5,020,000 Class A ordinary shares that Mr. Yang has the right to receive upon the exercise of share options within 60 days after March 31, 2023.
(1) Represents (i) 35,640,000 Class A ordinary shares and 24,734,013 Class B ordinary shares held by YooYoo Limited, (ii) 445,505 Class A ordinary shares held by Allies Partners Limited and (iii) 5,000,000 Class A ordinary shares that Mr. Yang has the right to receive upon the exercise of share options within 60 days after March 31, 2024.
(3) Represents 33,120,000 Class A ordinary shares and 24,734,013 Class B ordinary shares held by YooYoo Limited. For further information on YooYoo Limited, see footnote 1. 89 (4) Represents 27,272,727 Class A ordinary shares represented by ADSs held by JOLLY UNIQUE LIMITED.
(3) Represents 35,640,000 Class A ordinary shares and 24,734,013 Class B ordinary shares held by YooYoo Limited. For further information on YooYoo Limited, see footnote 1. 91 (4) Represents 27,272,727 Class A ordinary shares represented by ADSs held by JOLLY UNIQUE LIMITED.
As of December 31, 2022, other grantees a group held outstanding options to purchase 3,593,125 Class A ordinary shares of our company under the 2020 Plan, at exercise prices ranging from US$0.22 to US$0.68 per share. C. Board Practices Our board of directors currently consists of seven directors.
As of December 31, 2023, other grantees a group held outstanding options to purchase 5,689,288 Class A ordinary shares of our company under the 2020 Plan, at exercise prices ranging from US$0.22 to US$0.68 per share. C. Board Practices Our board of directors currently consists of seven directors.
Name Age Position/Title Tao Yang 46 Chairman and Chief Executive Officer Saifi Ismail 41 Director and President Jianfeng Xu 35 Director and Chief Operating Officer David Cui 54 Independent director Lili Xu 41 Independent director Saeed Al Hamli 55 Independent director Mohamed Al Ghanim 52 Independent director Yang Hu 40 Chief Financial Officer Tao Yang has been the Chairman of the board of directors of our company since February 2018.
Name Age Position/Title Tao Yang 47 Chairman and Chief Executive Officer Saifi Ismail 42 Director and President Jianfeng Xu 36 Director and Chief Operating Officer David Cui 55 Independent director Lili Xu 42 Independent director Saeed Al Hamli 56 Independent director Mohamed Al Ghanim 53 Independent director Yang Hu 41 Chief Financial Officer Tao Yang has been the Chairman of the board of directors of our company since February 2018.
Mr. Cui has extensive experience in public accounting and financial management. From August 2017 to September 2020, Mr. Cui was the chief financial officer of Huami Corporation. From August 2015 to April 2017, Mr. Cui was the chief financial officer of China Digital Video Holdings Limited, a company listed on the Hong Kong Stock Exchange. Prior to that, Mr.
From August 2017 to September 2020, Mr. Cui was the chief financial officer of Huami Corporation. From August 2015 to April 2017, Mr. Cui was the chief financial officer of China Digital Video Holdings Limited, a company listed on the Hong Kong Stock Exchange. Prior to that, Mr.
Cui has served as the chief financial officer of Vipshop Holdings Limited since November 2020. Mr. Cui has also served as an independent non-executive director of Inke Limited, a leading Chinese mobile live streaming company listed on the Hong Kong Stock Exchange, since June 2018, and 9F, Inc, a Nasdaq-listed leading digital financial account platform in China, since August 2019.
Cui has also served as an independent non-executive director of Inke Limited, a leading Chinese mobile live streaming company listed on the Hong Kong Stock Exchange, since June 2018, and 9F, Inc, a Nasdaq-listed leading digital financial account platform in China, since August 2019. Mr. Cui has extensive experience in public accounting and financial management.
As of December 31, 2022, other employees as a group held outstanding options to purchase 15,608,713 Class A ordinary shares of our company under the 2018 Plan, at exercise prices ranging from US$0.10 to US$0.68 per share. 83 2020 Plan In August 2020, our board of directors adopted the 2020 Plan.
As of December 31, 2023, other employees as a group held outstanding options to purchase 14,290,740 Class A ordinary shares of our company under the 2018 Plan, at exercise prices ranging from US$0.10 to US$0.68 per share. 85 2020 Plan In August 2020, our board of directors adopted the 2020 Plan.
To our knowledge, as of March 31, 2023, a total of 79,681,831 Class A ordinary shares were held by one record holder in the United States, representing approximately 51.0% of our total outstanding shares. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.
To our knowledge, as of March 31, 2024, a total of 82,311,897 Class A ordinary shares were held by one record holder in the United States, representing approximately 51.8% of our total outstanding shares. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. F.
Ordinary Shares Beneficially Owned as of March 31, 2023 Class A ordinary shares Class B ordinary shares Percentage of total ordinary shares Percentage of aggregate voting power** Directors and Executive Officers:*** Tao Yang (1) 38,585,505 24,734,013 39.3 84.5 Saifi Ismail * — * * Jianfeng Xu (2) 9,286,326 — 5.9 1.5 David Cui — — — — Lili Xu — — — — Saeed Al Hamli — — — — Mohamed Al Ghanim — — — — Yang Hu * — * * Directors and Executive Officers as a Group 48,216,442 24,734,013 44.7 85.8 Principal Shareholders: YooYoo Limited (3) 33,120,000 24,734,013 37.0 84.3 Orchid Asia (4) 27,272,727 — 17.5 4.4 WindBell Limited (2) 7,366,326 — 4.7 1.2 SIG Global China Fund I, LLLP (5) 9,090,909 — 5.8 1.5 * Beneficially owns less than 1% of our outstanding shares. ** For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class.
Ordinary Shares Beneficially Owned as of March 31, 2024 Class A ordinary shares Class B ordinary shares Percentage of total ordinary shares Percentage of aggregate voting power** Directors and Executive Officers:*** Tao Yang (1) 41,085,505 24,734,013 40.2 84.5 Saifi Ismail * — * * Jianfeng Xu (2) 10,336,326 — 6.4 1.6 David Cui — — — — Lili Xu — — — — Saeed Al Hamli — — — — Mohamed Al Ghanim — — — — Yang Hu * — * * Directors and Executive Officers as a Group 52,017,804 24,734,013 45.9 85.8 Principal Shareholders: YooYoo Limited (3) 35,640,000 24,734,013 38.0 84.3 Orchid Asia (4) 27,272,727 — 17.2 4.3 SIG Global China Fund I, LLLP (5) 9,090,909 — 5.7 1.4 * Beneficially owns less than 1% of our outstanding shares. ** For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class.
As of December 31, 2022, 4,493,125 Class A ordinary shares were issuable upon the exercise of outstanding share options under the 2020 Plan, and 2,153 Class A ordinary shares were available for future equity awards under the 2020 Plan, subject to further increases of reserved shares pursuant to the evergreen provision described above. 84 The table below summarizes, as of December 31, 2022, the options we have granted to our directors and executive officers under the 2020 Plan.
As of December 31, 2023, 6,989,288 Class A ordinary shares were issuable upon the exercise of outstanding share options under the 2020 Plan, and 893,117 Class A ordinary shares were available for future equity awards under the 2020 Plan, subject to further increases of reserved shares pursuant to the evergreen provision described above. 86 The table below summarizes, as of December 31, 2023, the options we have granted to our directors and executive officers under the 2020 Plan.
In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exercise of any option or other right or the conversion of any other security. 88 As of March 31, 2023, the total number of ordinary shares outstanding is 156,238,584, comprising 131,504,571 Class A ordinary shares and 24,734,013 Class B ordinary shares.
In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exercise of any option or other right or the conversion of any other security. 90 As of March 31, 2024, the total number of ordinary shares outstanding is 158,868,650, comprising 134,134,637 Class A ordinary shares and 24,734,013 Class B ordinary shares.
Option Grants Since the adoption of the 2018 Plan, we have granted options to certain directors, officers and employees. As of December 31, 2022, 27,348,713 Class A ordinary shares were issuable upon the exercise of outstanding share options under the 2018 Plan, and 83,000 Class A ordinary shares were available for future equity awards under the 2018 Plan.
Option Grants Since the adoption of the 2018 Plan, we have granted options to certain directors, officers and employees. As of December 31, 2023, 23,460,740 Class A ordinary shares were issuable upon the exercise of outstanding share options under the 2018 Plan, and 113,500 Class A ordinary shares were available for future equity awards under the 2018 Plan.
Cui has a bachelor’s degree in business administration from Simon Fraser University, Canada and is a licensed CPA in the United States and Canada. Lili Xu has served as one of our independent directors since February 2021. Ms. Xu has also served as an independent director of MINISO Group Holding Limited (NYSE: MNSO) since October 2020. Ms.
Cui has a bachelor’s degree in business administration from Simon Fraser University, Canada and is a licensed CPA in the United States and Canada. Lili Xu has served as one of our independent directors since February 2021. Ms.
Our operating subsidiaries are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance and other statutory benefits. Our board of directors may determine compensation to be paid to the directors and the executive officers.
We did not pay any other cash compensation or benefits in kind to our directors and executive officers. Our operating subsidiaries are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance and other statutory benefits.
Function Number of Employees % of Total Platform maintenance and product development 503 60.7 Customer services and operations 180 21.7 General and administration 92 11.1 Sales and marketing 54 6.5 Total 829 100.0 We primarily recruit our employees through online postings, headhunters, internal referrals or on-campus recruiting.
Function Number of Employees % of Total Platform maintenance and product development 485 62.3 Customer services and operations 159 20.4 General and administration 86 11.1 Sales and marketing 48 6.2 Total 778 100.0 We primarily recruit our employees through online postings, headhunters, internal referrals or on-campus recruiting.
From January 2005 to March 2014, Ms Xu held various positions at General Electric Company (NYSE: GE), including the chief financial officer of GE Power Generation Services China. Ms.
Xu served as the chief financial officer of Tongdao Liepin Group (HKEx: 6100) from March 2014 to September 2020 and an executive director thereof since March 2018. From January 2005 to March 2014, Ms Xu held various positions at General Electric Company (NYSE: GE), including the chief financial officer of GE Power Generation Services China. Ms.
Yang Hu has served as the Chief Financial Officer of our company since June 2020. Ms. Hu joined our company in September 2018 and was serving as our finance director prior to her appointment as our Chief Financial Officer. Prior to joining our company, Ms.
Hu joined our company in September 2018 and was serving as our finance director prior to her appointment as our Chief Financial Officer. Prior to joining our company, Ms. Hu served as the finance director of Qianbao Jinfu (Beijing) Technology Co., Ltd. from October 2017 to September 2018. Prior to that, Ms.
The compensation committee will assist the directors in reviewing and approving the compensation structure for the directors and the executive officers. For information regarding share awards granted to our directors and executive officers, see “—Share Incentive Plans.” Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers.
For information regarding share awards granted to our directors and executive officers, see “—Share Incentive Plans.” Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers. Under these agreements, each of our executive officers is employed for a specified time period.
He was one of the early founders of Thuraya Satellite Telecommunications in 1997 and served in Thuraya in many roles, including chief commercial officer. Mr. Al Hamli received an Executive MBA from American University of Sharjah (AUS) in 2003 and a BSC in Electrical Engineering from Florida Institute of Technology (FIT) in 1991.
Al Hamli received an Executive MBA from American University of Sharjah (AUS) in 2003 and a BSC in Electrical Engineering from Florida Institute of Technology (FIT) in 1991. Yang Hu has served as the Chief Financial Officer of our company since June 2020. Ms.
Xu has been the chief financial officer of Hangzhou KangSheng Health Consulting Co., Ltd. since October 2020. In addition, Prior to that, Ms. Xu served as the chief financial officer of Tongdao Liepin Group (HKEx: 6100) from March 2014 to September 2020 and an executive director thereof since March 2018.
Xu has also served as an independent director of MINISO Group Holding Limited (NYSE: MNSO) since October 2020 and Weilong Group (HKEx: 9985) since December 2022. Ms. Xu has been the chief financial officer of ClouDr Group Limited (HKEx: 9955) since October 2020. In addition, Prior to that, Ms.
Hu holds a master’s degree in economics from Xi’an Jiaotong University. 81 B. Compensation Compensation In 2022, we paid aggregate cash compensation of US$12.1 million to our directors and executive officers as a group. We did not pay any other cash compensation or benefits in kind to our directors and executive officers.
Hu worked at ZTE Corporation from September 2008 to August 2017, where she focused on corporate finance in both China and the Middle East. Ms. Hu holds a master’s degree in economics from Xi’an Jiaotong University. 83 B. Compensation Compensation In 2023, we paid aggregate cash compensation of US$16.8 million to our directors and executive officers as a group.
Removed
Hu served as the finance director of Qianbao Jinfu (Beijing) Technology Co., Ltd. from October 2017 to September 2018. Prior to that, Ms. Hu worked at ZTE Corporation from September 2008 to August 2017, where she focused on corporate finance in both China and the Middle East. Ms.
Added
Cui served as the chief financial officer of Vipshop Holdings Limited from November 2020 to May 2023. Mr.
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Under these agreements, each of our executive officers is employed for a specified time period.
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He is the founder and chief executive officer of Seattle Project Management Services, which focuses on and embraces new technology trends by investing in and partnering with leading technology companies. He has recently been appointed as a board director of Aurum Equity Partners, which specializes in infrastructure assets that provide essential services to communities and businesses.
Added
Our board of directors may determine compensation to be paid to the directors and the executive officers. The compensation committee will assist the directors in reviewing and approving the compensation structure for the directors and the executive officers.
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Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation On November 10, 2023, our board of directors adopted an Incentive Compensation Clawback Policy, or the Clawback Policy, providing for the recoupment of certain incentive-based compensation from current and former executive officers of our company in the event we are required to restate any of our financial statements filed with the SEC under the Exchange Act in order to correct an error that is material to the previously-issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.
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Adoption of the Clawback Policy was mandated by new NYSE continued listing standards introduced pursuant to Exchange Act Rule 10D-1.
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In addition, Section 304 of the Sarbanes-Oxley Act of 2002 permits the SEC to order the disgorgement of bonuses and incentive-based compensation earned by a registrant issuer’s chief executive officer and chief financial officer in the year following the filing of any financial statement that the issuer is required to restate because of misconduct, and the reimbursement of those funds to the issuer.
Added
A copy of the Clawback Policy has been filed herewith as Exhibit 97.1. In the year ended December 31, 2023, we were not required to prepare an accounting restatement that required recovery of erroneously awarded compensation pursuant to the Clawback Policy, nor were there any outstanding balance as of December 31, 2023 of erroneously awarded compensation to be recovered. 92

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest change(“ Guangzhou Yuanshiji ”), an investee of the Group. As of December 31, 2022, the loans were fully repaid by Guangzhou Yuanshiji. On November 26, 2021, the Group entered into an agreement with Fuzhou Dianjin Huyu Internet Technology Co., Ltd.
Biggest changeRelated Party Transactions Transactions with investees In 2022, the Group provided interest-free loans in the aggregate principal amount of RMB1 million (US$145,370) to Guangzhou Yuanshiji Software Technology Co., Ltd., or Guangzhou Yuanshiji, an investee of the Group. As of December 31, 2022, the loans were fully repaid by Guangzhou Yuanshiji.
Directors, Senior Management and Employees—B. Compensation—Employment Agreements and Indemnification Agreements.” 91 Share Incentive Plans See “Item 6. Directors, Senior Management and Employees—B. Compensation—Share Incentive Plans.” c. Interests of Experts and Counsel Not Applicable.
Directors, Senior Management and Employees—B. Compensation—Employment Agreements and Indemnification Agreements.” Share Incentive Plans See “Item 6. Directors, Senior Management and Employees—B. Compensation—Share Incentive Plans.” C. Interests of Experts and Counsel Not Applicable.
Shareholders Agreement Other than provisions with respect to registration rights, the description of which is set forth below, all provisions and rights under our shareholders agreement dated May 23, 2018 terminated upon consummation of our initial public offering. 90 Demand Registration Rights At any time after the earlier of (i) the fifth anniversary of the closing of the share purchase or (ii) 180 days following our initial public offering, holders of no less than 25% of the registrable securities then outstanding have the right to demand that we file a registration statement under the Securities Act covering the registration of at least 20% (or any lesser percentage if the anticipated gross proceeds to the company from such proposed offering would exceed US$5,000,000) of the registrable securities.
Demand Registration Rights At any time after the earlier of (i) the fifth anniversary of the closing of the share purchase or (ii) 180 days following our initial public offering, holders of no less than 25% of the registrable securities then outstanding have the right to demand that we file a registration statement under the Securities Act covering the registration of at least 20% (or any lesser percentage if the anticipated gross proceeds to the company from such proposed offering would exceed US$5,000,000) of the registrable securities.
(“ Fuzhou Dianjin ”), an investee of the Group, to authorize Fuzhou Dianjin for the use of the Group’s game art design resources for characters and scenes in the mobile game developed by Fuzhou Dianjin for a certain period.
On November 26, 2021, the Group entered into an agreement with Fuzhou Dianjin Huyu Internet Technology Co., Ltd., or Fuzhou Dianjin, an investee of the Group, to authorize Fuzhou Dianjin for the use of the Group’s game art design resources for characters and scenes in the mobile game developed by Fuzhou Dianjin for a certain period.
Expenses of Registration We will pay all expenses incurred in connection with any registration, but excluding selling expenses, underwriting discounts and commissions and fees for special counsel of the holders participating in such registration.
Registration pursuant to piggyback registration rights is not deemed to be a demand registration, and there is no limit on the number of times the holders may exercise their piggyback registration rights. 93 Expenses of Registration We will pay all expenses incurred in connection with any registration, but excluding selling expenses, underwriting discounts and commissions and fees for special counsel of the holders participating in such registration.
ITEM 7. MAJOR SHAREHO LDERS AND RELATED PARTY TRANSACTIONS A. Major Shareholders Please refer to “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” B. Related Party Transactions Transactions with investees In 2022, the Group provided interest-free loans in the aggregate principal amount of RMB1 million (US$145,370) to Guangzhou Yuanshiji Software Technology Co., Ltd.
ITEM 7. MAJOR SHAREHO LDERS AND RELATED PARTY TRANSACTIONS A. Major Shareholders Please refer to “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” B.
Removed
Registration pursuant to piggyback registration rights is not deemed to be a demand registration, and there is no limit on the number of times the holders may exercise their piggyback registration rights.
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Shareholders Agreement Other than provisions with respect to registration rights, the description of which is set forth below, all provisions and rights under our shareholders agreement dated May 23, 2018 terminated upon consummation of our initial public offering.

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